Singapore's GDP growth slowed to 5.4% in the third quarter of 2026, down from a four-year high in the previous quarter. This figure exceeded economists' expectations of 5%, as reported by Reuters.
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The government data indicated a decline in the manufacturing sector, which is crucial to the economy, contributing about 20% of GDP. This decrease was countered by growth in the construction sector. Earlier in August, Singapore had raised its annual economic growth forecast, buoyed by advancements in AI-related sectors and strong export performance during the first two quarters of the year. The updated forecast now estimates GDP growth for 2026 to be between 4.5% and 5.5%, significantly higher than the previous range of 2% to 4%. This marks the second revision of growth estimates this year, following an initial projection of 1% to 3% by the Ministry of Trade and Industry.
The latest GDP report comes as the Monetary Authority of Singapore (MAS) has opted to maintain its monetary policy after consecutive rounds of tightening in April and July, which were aimed at addressing inflation concerns linked to rising energy prices. The MAS anticipates that inflation will remain elevated due to higher energy and food costs but expects a decline to begin by mid-2027 as import costs decrease and domestic price pressures moderate.
The MAS expressed confidence that the Singaporean economy will continue to expand steadily in the coming quarters but may moderate as the current AI cycle slows and global financial conditions tighten. Notably, Singapore's monetary policy does not rely on interest rate adjustments; instead, it manages the Singapore dollar against a basket of foreign currencies, allowing for fluctuations within an undisclosed policy band.