Singapore’s strong GDP growth to see higher full-year fiscal surplus of up to S$13.8 billion: economists
For the first 9 months, corporate and income tax, GST collections are all up
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[SINGAPORE] Private-sector economists are pencilling in a larger-than-expected Budget surplus for the full fiscal year as the government’s operating revenue looks set to surpass estimates.
Operating revenue was S$98.5 billion for the nine months ended Dec 31, 2025, data from the Accountant-General’s Department showed, or 80.2 per cent of the full-year forecast of S$122.8 billion.
While a full-year surplus will boost the Republic’s fiscal firepower for addressing future needs, economists believe Budget 2026 support measures will be targeted.
The economy’s performance in the first three quarters was more resilient than anticipated.
The nine-month revenue figure is just under the 80.5 per cent progress marked in the same period in FY2024, and ahead of the 75 per cent benchmark for the first three quarters.
On a yearly basis, the April to December operating revenue data represents a 12.6 per cent growth.
The Singapore government’s financial year runs from Apr 1 to Mar 31 of the following year.
High tax takings
Advance estimates place gross domestic product growth at 4.8 per cent for 2025 – significantly higher than the 1 to 3 per cent forecast range during Budget 2025.
“Singapore’s economic outlook was relatively neutral at the start of FY2025,” said RHB group chief economist Barnabas Gan, explaining the “relatively conservative” official estimates.
But it “eventually panned (out) better”, with dissipating US tariff risks and support from the artificial intelligence (AI) and tech boom.
Economists highlighted higher tax revenues, particularly for corporate income tax and personal income tax.
The GDP growth comes with resilient key exports and wage growth as well as strong foreign direct investment inflows, noted OCBC chief economist Selena Ling.
Gan agreed that corporate income tax, personal income tax and goods and services tax “traditionally correlate positively with GDP growth, disposable income and overall confidence”.
In the first nine months, corporate income tax takings – the top tax source – reached S$28.3 billion, representing 86.7 per cent of its full-year S$32.7 billion projection. This was up 11.6 per cent year on year.
“Trade-related sectors surprisingly withstood the US tariffs shock well, alongside resilient modern services expansion,” pointed out DBS senior economist Chua Han Teng.
Moody’s head of South-east Asia economics Denise Cheok said that corporate income tax revenue “will likely hit or exceed the estimated target” for FY2025, highlighting the manufacturing, IT and financial services performances.
As for personal income tax receipts – the next-largest component of operating revenue – the S$16 billion collected from April to December is equivalent to 79 per cent of the full-year estimate of S$20.2 billion, and 8.1 per cent higher than in the corresponding FY2024 period.
GST takings, at S$15.9 billion, reached 82 per cent of the S$19.4 billion estimated for the whole of FY2025, and was up 6.7 per cent from the first nine months of the preceding fiscal year.
Ling highlighted that vehicle quota premiums (up 34.2 per cent on the year) also did well in the period, reflecting “healthy household balance sheets and resilient domestic labour market conditions culminating in big-ticket item purchases such as cars”.
Set to exceed
For FY2025 as a whole, RHB’s Gan anticipates that operating revenue will come in at S$130.7 billion; HSBC forecasts that it will reach S$131.4 billion; Maybank estimates that it will be S$129.8 billion.
OCBC’s Ling believes that, even assuming that revenue collection moderates in the seasonally slower final quarter, revenue growth would still likely reach 11 per cent on the year, nearly double the 5.3 per cent revenue growth assumed in Budget 2025.
FY2024 saw a S$6.4 billion overall fiscal surplus. Economists agreed that the FY2025 overall fiscal surplus would likely exceed the official projection of 0.9 per cent of GDP, or S$6.8 billion.
Ling believes that it “could be as high as” 1.6 per cent of GDP, which would be the highest fiscal surplus since FY2017. Maybank analysts Chua Hak Bin and Brian Lee similarly think that a surplus of 1.6 per cent of GDP, or about S$13.8 billion, is likely.
DBS’ Chua also foresees an upside surprise, with the bank estimating an overall fiscal surplus of S$10.7 billion, or 1.4 per cent of GDP.
Both RHB’s Gan and HSBC Asean economist Yun Liu put the overall surplus at 2 per cent of GDP.
While this surplus would be large by recent standards, it is not unprecedented, Gan said, recalling that growth surprises also lifted tax collections “well above conservative Budget assumptions” in FY2007, FY2010 and FY2017.
But while FY2017’s record 2.1 per cent surplus was heavily driven by one-offs, a FY2025 upside “would be more structurally driven”, he said, coming from “broad-based tax buoyancy plus much larger net investment returns”.
This would mean it would likely be smaller as a proportion of GDP, but more sustainable, he added – “resembling a ‘solid surplus’ rather than a one-off fiscal spike”.
Fiscal firepower
HSBC’s Liu believes that, despite the strong surplus, the upcoming Budget is “unlikely to be a generous one” compared with Budget 2025.
She expects a “conservative” Budget, considering that FY2026 marks the first year in the new five-year government term, coupled with a “relatively decent 2026 growth outlook”.
Maybank’s duo said: “The government will likely be prudent in the first year of the new electoral term, preserving some dry power to draw upon.”
Economists expect a balanced fiscal approach, with targeted support.
This would include navigating near-term challenges – Cheok from Moody’s sees possible room for continued cost-of-living support – as well as a focus on medium to long-term issues.
Economists named creating good jobs and supporting the workforce, AI and innovation, the green transition and sustainability and internationalisation of businesses as some key areas.
The Maybank pair added that the strong fiscal revenue suggests room for personal and corporate income tax rebates.
OCBC’s Ling noted: “The current government (is) in a very healthy fiscal position in its first year of its term of government.” She added that this could mean “substantial fiscal headroom for the FY2026 Budget”.
She said: “Even if the government is conservative, the size of its fiscal surplus suggests that even if it runs a largely balanced Budget for FY2026, there is already a substantial buffer in place.”
For more of BT’s Budget 2026 coverage, go to bt.sg/budget26
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