On a quarter-on-quarter seasonally adjusted basis, gross domestic product (GDP) grew by 1.1%, moderating from the 1.5% expansion recorded in the second quarter, according to advance estimates from the city-state’s Ministry of Energy, Trade and Industry on Wednesday.
The manufacturing sector expanded by 7.5% year-on-year during the period, a notable slowdown from the 12.9% increase reported in the previous quarter.
The construction industry recorded an 8.8% year-on-year growth, up from 6.1% in the previous quarter, supported by higher construction output in both the public and private sectors.
The overall services sector maintained a year-on-year growth rate of 5.2%, led by wholesale trade and transportation and storage.
Wholesale & retail trade and transportation & storage grew by a combined 8% year-on-year, up from 6.9% in the previous quarter, with all sectors in the group expanding except retail trade.
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A view of Singapore. Photo by Unsplash/Andrew Lum |
Selena Ling, OCBC’s chief economist, said Singapore’s growth continued to be driven by AI and electronics-related activities and trade and transport services, alongside construction and infrastructure.
She noted that finance, information and communications, and professional services continued to post healthy growth, though consumer-oriented industries and other domestically focused services underperformed.
“This divergence creates a dual-speed expansion where businesses linked to construction, trade and advanced electronics may continue to benefit from strong demand, while consumer-oriented sectors face a more challenging environment, especially on the domestic cost front and tightening financial conditions,” she said, as quoted by The Straits Times.
The third-quarter GDP growth rate posted by the Southeast Asian city-state, ranked the world’s second-richest by GDP per capita by The Economist in 2025, exceeded the 5% expected by economists surveyed by Reuters and the 5.1% consensus estimate in a Bloomberg poll.
The city-state’s current GDP growth forecast for 2026 is at 4.5-5.5%, more than double the lower end of its previous forecast of 2-4%.
Singapore has raised its growth forecast twice this year, having initially projected growth of 1-3% at the start of the year.
The latest quarterly performance has prompted some analysts to upgrade their full-year economic growth projections for the country.
Yun Liu, senior ASEAN economist at HSBC, said the bank has raised the forecast to 5.8% from 5.1%, which would likely make Singapore the second-fastest-growing economy in Southeast Asia behind Vietnam, according to Channel News Asia.
Sheana Yue, senior economist at Oxford Economics, expects Singapore’s GDP growth to beat earlier estimates, potentially approaching 6%.
She told CNA that AI-related influence would remain “a pretty strong driver going into next year” for the economy, but AI could also become a key risk in 2027 if a pullback comes “prematurely.”
The advance estimates were released on the same day the Monetary Authority of Singapore decided to keep its monetary policy unchanged after two straight rounds of tightening in a move that surprised analysts.
The central bank expects inflation to stay elevated in the near term amid rising energy and food costs before easing from mid-2027 “as import costs ebb and domestic price pressures stay subdued,” according to its statement on Wednesday.
“The Singapore economy should continue to expand at a firm pace in the immediate quarters ahead, and moderate thereafter as the AI cycle eases from its exceptional pace and global financial conditions tighten,” it said.