Singapore’s economy posts firmer rebound as industrial output surprises

The bank said risks have shifted toward a steeper 1.0% slope as early as April 2026 if core inflation momentum normalises.

Singapore’s economy is set to post a stronger rebound in 2025 than previously expected, according to UOB’s Quarterly Global Outlook for 1Q 2026.

After third-quarter growth came in at 4.2% YoY, the Ministry of Trade and Industry raised its full-year forecast to around 4.0%, whilst UOB projects 4.4%, citing what it described as a “blockbuster” industrial production print in October.

Exports are leading the recovery. Non-oil domestic exports rose 22.2% YoY in October, with electronics up 33.2%, reflecting broad AI-related demand across the electronics value chain.

On monetary policy, UOB’s base case is for the Monetary Authority of Singapore to maintain a modest S$NEER appreciation of about 0.5% a year through 2026.

The bank said risks have shifted toward a steeper 1.0% slope as early as April 2026 if core inflation momentum normalises.

It expects the USD/SGD to weaken over 2026, moving from 1.29 in early 2026 toward 1.26 by the fourth quarter, and noted that the S$NEER appears to have bottomed in November.

Interest rates are expected to ease before stabilising. UOB forecasts the three-month SORA at 1.13% in the first quarter of 2026, rising moderately to 1.31% by year-end.

Ten-year Singapore Government Securities yields are projected to recover from 1.80% to about 2.30% over the course of the year.

Despite a temporary rise in October, UOB expects core inflation to average about 0.7% in 2025, helped by a firm Singapore dollar and contained imported prices.

The bank’s FX projections imply EUR/SGD near 1.51 and GBP/SGD around 1.73 through 2026. It sees SGD/MYR recovering toward 3.21 and SGD/CNY edging toward 5.52 by end-2026.

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