DBS forecast of 2.8% growth was eclipsed by actual 5% GDP growth, led by financial services and ICT.

The 2025 Growth Trajectory: Projection vs Reality

Singapore's full-year gross domestic product (GDP) grew 5.0% in 2025, far exceeding the 2.8% projection issued by DBS at the start of the year and marking a significant upward revision from the Ministry of Trade and Industry's (MTI) earlier official forecast of "around 4%." The outturn represents a moderation from the 5.3% expansion recorded in 2024 but nonetheless surpassed virtually all pre-year consensus estimates.

DBS's 2.8% baseline forecast, published in early 2025, was anchored on an estimated medium-term growth potential of 2-3% and an expectation of resilient external demand, particularly from electronics, trade-related services, finance, and ICT. WorldEconomics, using a separate methodology, estimated 2025 GDP growth at 2.5%. Both were materially below the final print. MTI revised its official full-year forecast upward during the year as the economic expansion broadened, culminating in a year-on-year Q4 2025 growth rate of 6.9%—revised sharply from the advance estimate of 5.7%—which propelled the full-year number to 5.0%.

The magnitude of the outperformance underscores the degree to which Singapore's economy exceeded baseline assumptions, particularly in the second half of the year as global trade activity stayed resilient despite elevated US tariffs, trade diversion via supply chain adjustments, and robust AI-related exports.

Annual GDP Growth (%) (%)Source: Orionmano Industries

Modern Services as Growth Engines

The 2025 expansion was anchored by modern services—financial services and information and communications technology (ICT)—which together account for approximately 18% of Singapore's GDP. According to sectoral data from the Department of Statistics Singapore, finance and insurance contributed 13% of total output, while information and communications contributed 5%.

Financial services benefited from supportive macroeconomic conditions and expected global interest rate cuts, which fuelled investment activity. Demand for tech services was underpinned by sustained enterprise spending on digitalisation, particularly generative AI and other emerging solutions, according to DBS's sectoral analysis. The ICT sector grew on the back of sustained enterprise demand for AI-enabled and other digital solutions.

The Monetary Authority of Singapore's April 2026 Macroeconomic Review confirmed that the technology-related segments within the modern services cluster remained a leading driver of growth through early 2026, with the sector's contribution to year-on-year growth broadening beyond finance alone.

Manufacturing and Trade Complement the Surge

Manufacturing, which accounts for 21% of Singapore's GDP, provided a structural complement to services-led growth. The sector's performance was heavily driven by electronics output, which benefited from Singapore's strategic role in the global semiconductor supply chain. Global semiconductor sales grew 11.2% in 2025, directly supporting Singapore's electronics output and exports amid rising AI-related demand, as DBS noted.

Trade-related services—particularly wholesale trade, which represents approximately 17% of GDP—also contributed meaningfully. The trade cluster benefited from resilient global trade flows, driven in part by trade diversion as supply chains adjusted to US tariff regimes and robust AI-related exports.

The combined weight of manufacturing (21%), wholesale trade (17%), finance and insurance (13%), and ICT (5%) meant that roughly 56% of Singapore's economic output was driven by externally oriented or technology-linked sectors during the year.

Risks to the Outlook

For 2026, MTI has revised its growth forecast range upward to 2-4%, from the previous 1-3%, reflecting the carry-over momentum from 2025. However, several downside risks loom. DBS flagged that the potential escalation of trade tensions could disrupt global supply chains, increase costs, and pose challenges for Singapore's highly interconnected and trade-dependent economy. DBS senior economist Chua Han Teng cautioned that the lagged effects of US tariffs, which remain higher globally than before President Donald Trump's second term, threaten Singapore's non-electronics exports. Global trade headwinds are expected to remain the principal external risk, constraining demand for goods and services outside the resilient AI-related value chain.

Singapore's GDP contracted 0.3% quarter-on-quarter seasonally adjusted in Q1 2026, according to advance estimates, reflecting a normalisation of activity in trade-related and modern services clusters after a strong Q4 2025. The Monetary Authority of Singapore described this as an expected moderation rather than a reversal, but the data confirms that the pace of expansion will likely temper from 2025's 5% rate as base effects normalise and external headwinds materialise.

Longer-term structural drivers remain intact. Singapore's role as a global trade hub, its positioning in the AI and semiconductor value chains, and continued foreign direct investment into high-value manufacturing and financial technology all support the view that modern services will remain the core pillars of the economy even as headline growth moderates.