In the third quarter of 2026, Singapore's economy experienced a deceleration in growth, with GDP rising by 5.4%, a decrease from the previous quarter's four-year high. Despite this slowdown, the growth rate exceeded the 5% forecast by economists surveyed by Reuters.
The decline in the manufacturing sector, which accounts for approximately 20% of the GDP, was somewhat balanced by growth in construction. Earlier in the year, Singapore had raised its annual growth forecast, driven by advancements in AI-related sectors and strong export performance.
The current forecast for 2026 remains optimistic, projecting growth between 4.5% and 5.5%, significantly higher than the initial estimate of 1% to 3%. This marks the second upward revision of growth estimates for the year.
The Monetary Authority of Singapore (MAS) has maintained its monetary policy steady after two rounds of tightening earlier in the year, citing inflation risks linked to rising energy prices. The MAS anticipates that inflation will remain elevated in the short term but is expected to ease by mid-2027 as import costs decline and domestic price pressures stabilize.
The MAS's approach to monetary policy involves managing the Singapore dollar against a basket of currencies, rather than setting interest rates directly. Overall, while the immediate outlook for Singapore's economy remains positive, there are indications that growth may moderate as the AI cycle slows and global financial conditions tighten