Sector expanded 4.3% in 2025, down from 7.3% in 2024; accommodative macro conditions and sustained credit intermediation underpin the 2026 outlook.

The Monetary Authority of Singapore projects the finance and insurance sector will grow 3.6% in 2026, backed by accommodative macro and financial conditions, after a 4.3% expansion in 2025. The moderation reflects a normalisation from the post-pandemic rebound, but the sector remains on a steady trajectory supported by robust banking and insurance performance and an environment of low interest rates that has strengthened credit intermediation.

2025 Sector Performance and Drivers

Singapore’s finance and insurance sector expanded 4.3% in 2025, moderating from 7.3% in 2024. Growth was driven mainly by banking and insurance, supported by sustained credit intermediation under accommodative financial conditions. Life insurance posted robust performance, while fund management saw subdued activity due to weaker global markets. Overall loans rose 5.7% y-o-y in November 2025, reflecting accommodative credit conditions.

Growth (%) (%)Source: Orionmano Industries

The banking segment benefited from sustained credit demand in an environment where overall loans rose 5.7% year-on-year in November 2025, according to the FPA Financial Services Market View. The low-interest-rate environment boosted net fees and commissions earned by fund managers, though the fund management segment overall saw more subdued activity, reflecting weaker global market conditions. Life insurance was a notable outperformer, contributing to the sector's resilience despite headwinds in capital markets.

2026 Forecast and Macroeconomic Backdrop

MAS expects the finance and insurance sector to remain supported by broadly accommodative macroeconomic and financial conditions in 2026. The MAS survey of professional forecasters pegs 2026 finance and insurance sector growth at 3.6%. Singapore’s overall GDP growth for 2026 is forecast at 3.6%, near the upper end of the official 2–4% range. Headline inflation is projected at 1.5% in 2026, with core inflation at 1.5%.

The private-sector economists who responded to the MAS quarterly survey, released on 26 February 2026, raised their full-year GDP growth projection for 2026 to 3.6%, up from 2.3% in the December 2025 survey. This upgrade was driven by better full-year prospects for Singapore’s manufacturing, wholesale and retail trade sectors. Manufacturing growth is forecast at 4.3%, while wholesale and retail trade is expected to expand 4.0%. The finance and insurance sector forecast of 3.6% was unchanged from the previous survey round.

For 2027, economists expect GDP growth to moderate to 2.5%, with headline and core inflation both projected at 1.7%.

Monetary Policy and Financial Conditions

In January 2026, MAS maintained the prevailing modest rate of appreciation of the S$NEER policy band, with no change to width or level. MAS Core Inflation is projected to normalise to 1.0–2.0% in 2026. The low-interest-rate environment has strengthened credit intermediation; overall loans rose 5.7% y-o-y in November 2025. MAS noted that financial services should be supported by steady lending and capital market activity.

The MAS Monetary Policy Statement of 29 January 2026 stated that after a period of weakness, underlying price pressures are returning closer to trend. MAS Core Inflation averaged in the lower part of the 1.0–2.0% range in Q4 2025 and is projected to normalise further in 2026. The authority noted that it is in an appropriate position to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments amid uncertainties in the external environment.

The Macroeconomic Review Volume XXV Issue 1, published in January 2026, highlighted that Singapore’s GDP growth should be resilient in the near term, supported by a sustained AI-driven IT upcycle. The expansion in trade-related sectors is likely to be underpinned by continuing near-term strength in the global AI-driven capex cycle, while non-technology-related segments—including financial services—should be supported by steady lending and capital market activity.

Regulatory Initiatives and Downside Risks

MAS launched the ‘Pathfinder’ programme in July 2025 to support financial institutions in adopting AI responsibly. MAS continues to develop the insurance-linked securities (ILS) market to narrow the protection gap in Asia. Private-sector economists cited trade tensions and a potential AI bubble burst as key downside risks. Upside potential exists if the AI-led technology upcycle is sustained and global growth remains resilient.

The Pathfinder programme is the first of four initiatives MAS is rolling out to guide responsible and widespread AI adoption in the financial sector, according to Chambers Global Practice Guides. The other initiatives focus on anchoring AI capabilities in Singapore, addressing governance and risk management issues through issuing guidelines, and preparing the financial sector workforce for job roles transformed by AI.

MAS has adopted a three-pronged approach to grow the ILS market and ecosystem in Singapore, including a regulatory sandbox that enables financial institutions and fintech players to experiment with innovative financial products or services within a well-defined space and duration. The objective is to provide additional insurance capacity through financing from capital markets that can be catered towards all forms of risks—natural catastrophes, longevity, mortality, operational risks, and cyber risks.

Private-sector economists surveyed by MAS in February 2026 identified trade tensions and a potential AI bubble burst as the foremost downside risks to Singapore’s economic outlook, with the latter having potential negative spillover effects on the broader financial market and the global economy. Geopolitical tensions, including the introduction of semiconductor and pharmaceutical tariffs, have emerged as significant concerns. However, upside potential exists if the AI-led technology upcycle is sustained, global economic growth remains resilient, and trade tensions continue to ease.

While accommodative conditions support steady growth, the sector remains exposed to external uncertainties, and MAS stands ready to adjust policy if risks to medium-term price stability materialise.