Economists Lift Singapore’s 2025 Growth Outlook but Warn of Slower Pace Ahead

Post by : Saif

Economists have become more confident about Singapore’s economic performance in 2025, according to a new survey released by the Monetary Authority of Singapore (MAS). The survey shows that growth expectations for next year have been raised, supported by strong recent data and a stable global outlook. However, experts also believe that this faster pace may not last, with growth expected to slow in 2026.

The December-quarter survey, which included responses from 20 economists, found that the median forecast for Singapore’s economic growth in 2025 has risen sharply to 4.1%. This is a big jump from the earlier estimate of 2.4% made in the previous survey. The improved outlook reflects stronger-than-expected performance in recent months, especially in trade and manufacturing.

Recent official data showed that Singapore’s economy grew by 4.2% in the third quarter compared to a year earlier. This result was better than both market expectations and early estimates, giving economists more confidence in the country’s recovery. In response to this strong performance, Singapore’s trade ministry had already raised its 2025 growth forecast in November to around 4.0%.

Despite this positive momentum, economists believe the economy will cool down after 2025. Growth in 2026 is expected to moderate to about 2.3%. This slower pace reflects concerns that global demand may weaken and that current growth drivers may lose some strength over time.

The survey also highlighted the risks facing Singapore’s open and trade-dependent economy. Most economists pointed to geopolitical tensions as the biggest downside risk. Ongoing conflicts and strained relations between major economies could disrupt trade, investment, and supply chains.

Another concern raised in the latest survey is the possibility of an artificial intelligence bubble bursting. About four in ten economists listed this as a risk, a factor that was not mentioned in the previous survey. While AI has boosted optimism and investment in the tech sector, experts warn that too much excitement could lead to sharp corrections if expectations are not met.

On the positive side, economists said that a strong AI-driven technology cycle and steady global growth could push Singapore’s economy higher than expected. As a global business and technology hub, Singapore stands to benefit if these trends continue.

In terms of monetary policy, there is strong agreement that the MAS will keep its policy unchanged in the near term. All economists surveyed expect no change at the upcoming policy review in January. Most also believe policy will remain steady at the April review. Only a small group, about 11%, expects a policy tightening by the July 2026 review.

Inflation is expected to stay low in the short term. The survey showed that forecasts for both core and headline inflation in 2025 remain unchanged at 0.7% and 0.9% respectively. However, inflation is expected to rise slightly in 2026, with core inflation forecast at 1.3% and headline inflation at 1.5%.

These inflation expectations broadly match the MAS’s own outlook. In October, the central bank said it expects core inflation to average around 0.5% in 2025, while headline inflation should be between 0.5% and 1.0%.

Overall, the survey paints a balanced picture of Singapore’s economic future. Strong growth is likely in 2025, driven by solid recent performance and global demand. At the same time, economists remain cautious about longer-term risks, including global tensions and possible market bubbles.

For policymakers, businesses, and households, the message is clear. Singapore’s economy is on firmer ground for now, but careful planning and steady policies will be needed to manage risks and maintain stable growth in the years ahead.

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