S'pore economy beats forecasts with 2.9% growth in Q3 2025

Performance prompts some economists to raise their full-year growth forecasts

- Angela Tan Senior Business Correspondent

The construction sector grew 3.1 per cent year on year in the third quarter, moderating from the 6.2 per cent growth in the preceding quarter. Growth came from an increase in both public and private sector construction projects. ST FILE PHOTO

(ST FILE PHOTO)

A construction boom, generous fiscal support and falling interest rates are cushioning the Singapore economy from the US tariff shock and an export slump.

This has prompted some economists to raise their full-year growth forecast.

Singapore's economy grew 2.9 per cent in the third quarter of 2025 compared with the same period in 2024, advance estimates from the Ministry of Trade and Industry (MTI) on Oct 14 showed.

The third-quarter growth estimate was better than expected, beating economists' forecast of 2 per cent growth in a Bloomberg poll.

Japanese bank Mitsubishi UFJ Financial Group said that while the growth marks a slowdown from the 4.5 per cent expansion recorded in the second quarter, this was due to high base effects from a year ago, and reflects a resilient pace of expansion amid global trade headwinds.

Manufacturing output avoided a contraction, and services are holding up, helped by robust tourism and supportive financial conditions, noted Nomura's chief Asean economist Euben Paracuelles.

Maybank economists, Dr Chua Hak Bin and Mr Brian Lee, reckoned the export downturn would be short-lived.

"US inventories reflect limited front-loading; a boom in capital spending on artificial intelligence (AI) supports growth in electronics exports; and a significant proportion of exports, including electronics, is exempt from tariffs," they said.

Front-loading refers to the rush by companies to increase imports, exports, and production before the US tariffs kicked in to avoid paying them. This can result in a short-term boost in trade.