GDP growth may exceed 4.5%-5.5% forecast on tech and construction gains

The forecast comes despite economic growth easing to 5.4% in Q3 from 6.2% in Q2.

Singapore's economic growth could exceed the government's 2026 forecast range of 4.5% to 5.5%, as strong electronics exports and construction activity helped drive growth to an average of about 6% in the first three quarters, according to eToro.

"For the year to stay inside that range, it means the fourth quarter (Q4) would have to stop growing altogether, which is unlikely to happen," said Zavier Wong, market analyst at eToro.

He further expects the Ministry of Energy, Trade and Industry to lift its 2026 GDP growth forecast next month.

Wong’s assessment followed GDP expansion of 5.4% year-on-year in Q3, moderating from an upwardly revised 6.2% in the previous quarter.

The Monetary Authority of Singapore said in its  October Macroeconomic Review that the economy is expected to continue expanding steadily in the coming quarters, with the artificial intelligence (AI)-led expansion remaining relatively well-anchored into 2027.

Separately, United Overseas Bank (UOB) raised its full-year growth forecast to 5.7% from 5.0%, citing upward revisions to first-half growth and stronger-than-expected Q3 performance.

The bank said that wholesale and retail trade, alongside transportation and storage, rose 2.2% quarter-on-quarter (QoQ) on a seasonally adjusted basis, compared with flat growth in Q2.

UOB attributed the improvement partly to stronger wholesale trade activity involving machinery, equipment and supplies, supported by demand related to AI.

Construction also rebounded by 3.4% QoQ, reversing a 2.7% contraction in Q2, whilst manufacturing declined 0.9% following a 6.3% expansion.

However, the bank expects GDP growth to moderate to 3.2% in 2027 due to higher comparison bases and an anticipated slowdown in AI-related investment.

It also warned that higher global interest rates could weigh on consumption and non-AI investment in Singapore's major trading partners, potentially affecting external demand.

Meanwhile, RHB maintained its 2026 growth forecast at 5.0%, with upside risks towards 5.4%.

The bank expects electronics and precision engineering to continue supporting manufacturing growth through the remainder of the year, driven by demand for AI infrastructure and semiconductors.

Electronics output grew 27.1% year-to-date, whilst precision engineering expanded 16.3%, it said.

RHB also highlighted construction as the fastest-growing sector in Q3. It expects major infrastructure projects, including Changi Airport Terminal 5, Cross Island Line Phase 2 and Tuas Port, to sustain construction activity.

The bank also maintained its industrial production and non-oil domestic export growth forecasts at 9.0% and 15.5%, respectively.

However, Wong warned that economic growth remains uneven, with most gains coming from electronics exports and construction rather than household spending.

"Most households aren't seeing that growth in their wallets," he said.

RHB similarly cautioned that weaker wage growth, cautious hiring and higher transportation costs could weigh on discretionary spending and retail activity in the second half of the year.

The bank also identified uncertainty over US tariffs and a potential slowdown in AI-related investment as risks to Singapore's manufacturing and export outlook.