MAS expects the sector to benefit from low interest rates and sustained credit intermediation, even as hiring plans trail national averages.

Singapore's finance and insurance sector expanded 4.3% in 2025, down sharply from 7.3% in 2024, while hiring plans for Q2 2026 registered a net employment outlook of just 11%—well below the national average of 24%—even as the Monetary Authority of Singapore expects accommodative macroeconomic and financial conditions to sustain the sector through 2026.

Growth Moderates from 2024 Peak

Singapore's finance and insurance sector grew 4.3% in 2025, moderating from the 7.3% recorded in 2024, according to data from the Ministry of Trade and Industry cited by FPA Financial. The expansion was driven primarily by banking and insurance segments, supported by sustained credit intermediation under accommodative financial conditions and robust life insurance performance. The fund management segment, however, saw more subdued activity, reflecting weaker global market conditions.

The moderation aligns with broader economic trends noted in the MAS Macroeconomic Review for January 2026, where the central bank assessed that Singapore's output gap—the difference between actual and potential GDP—would narrow slightly to around 0.7% of potential GDP in 2026, compared with 0.9% in 2025. The near-term outlook remains underpinned by tech-related activities, which MAS projects will "continue to outperform," supported by the global artificial intelligence tailwind, but non-technology sectors such as financial services are also likely to experience firm growth.

MAS Outlook: Accommodative Conditions to Support 2026

In its January 2026 Macroeconomic Review, MAS stated that the finance and insurance sector is expected to remain supported by broadly accommodative macroeconomic and financial conditions. Recent monetary easing has strengthened credit intermediation, with overall loans rising 5.7% year-on-year in November 2025. A low-interest-rate environment is expected to sustain credit growth and support both insurance and banking activity in the year ahead.

MAS maintained its prevailing monetary policy stance in January 2026, keeping the Singapore dollar nominal effective exchange rate (S$NEER) policy band on a modest and gradual appreciation path. The central bank said it expects the finance and insurance sector to register steady growth in 2026, supported by the accommodative backdrop. The Business Times reported that MAS identified financial services alongside construction as non-technology sectors likely to experience firm growth in 2026.

However, risks are emerging on the cost front. MAS raised its full-year 2026 forecasts for both core and headline inflation to 1–2%, from 0.5–1.5% previously. The central bank said core inflation momentum is expected to rise closer to its trend pace in the quarters ahead, reflecting gradual increases in imported and domestic costs, as well as firmer demand conditions in line with a slightly positive output gap. This should lift headline inflation, although the increase would be tempered by more modest accommodation inflation due to the lagged pass-through of recent moderate rent increases.

Hiring Plans Weaken Despite Sector Resilience

Despite the positive growth outlook, hiring intentions in Singapore's finance and insurance sector have weakened markedly. According to the ManpowerGroup Employment Outlook Survey for Q2 2026, the Finance and Insurance sector reported a Net Employment Outlook of 11%, down 23 percentage points from the previous quarter—the sharpest quarter-on-quarter decline among all sectors tracked in Singapore.

The national average Net Employment Outlook for Q2 2026 stood at 24%, with 45% of employers planning to increase staff and 21% expecting reductions. By comparison, the Information sector led all industries with a 41% NEO, followed by Construction and Real Estate at 39%. Utilities and Natural Resources was the only sector with a negative outlook at -11%.

Globally, the Finance and Insurance sector posted a Net Employment Outlook of 35% in Q2 2026, up 2 percentage points from the previous quarter, indicating that Singapore's hiring market is underperforming the global sector trend. The survey was based on responses from more than 530 employers in Singapore and 41,764 employers across 42 countries, with data collected between 1 January and 3 February 2026.

Net Employment Outlook (%) (%)Source: Orionmano Industries

Outlook: Cautious Expansion Amid Rising Inflation and Weak Hiring

While accommodative conditions and credit growth should sustain the sector into 2026, rising inflation and weak hiring sentiment suggest a cautious expansion, with global monetary policy normalisation potentially tempering gains later in the year. MAS has already signaled that it will continue to monitor global and domestic developments closely and stands ready to respond to risks to medium-term price stability.

The central bank's April 2026 Monetary Policy Statement, released after the as-of date of this analysis, indicates that global energy and input costs have risen since late February 2026 and will remain above pre-conflict levels for some time. MAS therefore increased slightly the rate of appreciation of the S$NEER policy band, citing higher costs and slower global growth that will weigh on the Singapore economy. Core inflation is now forecast to rise to around 2.5% year-on-year for some time before easing to its historical average in the later part of 2027.

The combination of elevated inflation, tightening monetary conditions, and weak hiring sentiment creates a more complex operating environment for financial institutions than the accommodative conditions of early 2026 might suggest. The fund management segment, already subdued in 2025 due to weaker global markets, faces additional headwinds from rising input costs and geopolitical uncertainty, even as banking and insurance benefit from sustained credit intermediation and life insurance demand.