GDP growth seen at 5.2% in Q3 amidst strong trade

Export volumes accelerated, whilst industrial production growth eased.

Singapore’s gross domestic product (GDP) is forecast to grow 1.4% quarter on quarter (QoQ) on a seasonally adjusted basis and 5.2% year on year (YoY) in the third quarter (Q3) of 2026, according to UOB.

The estimate comes ahead of Singapore’s Q3 GDP advance estimates, which are expected to be released on 14 October alongside the October Monetary Policy Statement.

GDP grew 1.4% QoQ on a seasonally adjusted basis and 5.9% YoY in the second quarter (Q2), whilst July-August activity indicators outperformed earlier expectations.

Non-oil domestic export volumes rose 24.6% YoY in July-August, accelerating from 21.3% in Q2, whilst non-oil re-export volumes increased 45.3%, up from 34.2%.

UOB attributed the stronger trade performance to sustained artificial intelligence-related tailwinds.

Whilst overall industrial production moderated to 10.9% YoY in July-August from 12.9% in Q2, the electronics purchasing managers’ index rose to 52.9 in September from 52.6 in August.

UOB said firms appeared to be drawing down inventories to meet robust new orders, with inventory replenishment expected to support electronics manufacturing activity.

The manufacturing and wholesale trade sectors, which collectively account for around 34%-35% of GDP, are expected to expand at a healthy pace in Q3.

The finance and insurance sector is also seen to remain robust, supported by commercial banking loan growth, which accelerated to 14.3% YoY in July-August from 10.1% in Q2.

Foreign exchange market turnover rose 11.5%, whilst SGX equity market turnover increased 32.7%.

Transport and storage sector growth is expected to moderate, reflecting softer air cargo tonnage and port container throughput.

Meanwhile, consumer-facing sectors remain sluggish, with retail sales volumes falling 2.1% YoY and F&B sales volumes declining 3.1% in July-August.

“However, their drag on headline GDP growth should remain limited given their small GDP contribution,” UOB noted.

Assuming below-trend sequential growth of 0.6% in the fourth quarter, GDP growth would reach 4.7% YoY in the quarter and 5.5% for full-year 2026, at the upper end of the Ministry of Trade and Industry’s 4.5%-5.5% forecast range and above UOB’s current 5.0% forecast.

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