UOB lifts 2026 Singapore GDP forecast on ‘solid’ Q4 growth, ‘outperformance’ in 2025; RHB maintains projections

[SINGAPORE] UOB on Monday (Jan 5) raised its 2026 gross domestic production growth forecast for Singapore to 2.6 per cent, from 2.1 per cent previously.

The revision comes after the Republic’s “outperformance” in 2025 GDP growth relative to November estimates by the Ministry of Trade and Industry, UOB said. It added that the full-year figure of 4.8 per cent surpassed 2024’s “strong growth” of 4.4 per cent.

Economic expansion in the final three months of 2025 – up 1.9 per cent quarter on quarter and 5.7 per cent year on year – also marked a third consecutive quarter of “solid” sequential growth.

RHB similarly noted that Singapore’s full-year GDP growth in 2025 was “stronger than expected”, being the fastest expansion since 2021 when the figure came in at 9.8 per cent.

The brokerage maintained its forecast of 3 per cent year-on-year GDP growth in 2026. “Growth momentum is expected to remain firm, supported by resilient external demand,” it said.

“Reflecting this optimism, our 2026 GDP growth forecast of 3 per cent sits at the top end of the official 1 to 3 per cent range,” it added, further forecasting that the economy will expand 3.9 per cent year on year in Q1 2026.

Manufacturing as key driver of Q4 expansion

UOB noted that GDP growth in Q4 2025 was driven by manufacturing activity, which jumped 15 per cent year on year and 9.2 per cent quarter on quarter.

GDP growth during the quarter was also supported by the electronics cluster, amid “sustained demand for artificial intelligence (AI)-related semiconductors, servers and server-related products”.

The bank added that pharmaceutical output was also “robust”, likely due to shifts in the product mix and front-loading of orders after the US’ pharmaceutical tariff announcements in September 2025.

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2026 growth drivers

RHB said that “improving trade dynamics (and) anticipated global monetary easing, amid… continued strong growth momentum” from Q4 2025 are set to drive GDP growth in 2026.

This comes as tariff risks ease and as global economic conditions have “proven more resilient than expected, supported by recent de-escalations in trade tensions”, it said.

RHB added that domestic demand is “expected to remain resilient”, given “steady consumption, investment and government policies”.

UOB remarked that the rising electronics orders-to-inventories ratio in December could signal “sustained tailwinds” for the manufacturing sector in the first half of 2026.

The continued surge in South Korea’s semiconductor exports in December underscores persistent AI-related demand in the near term, it added.

The bank pointed out that trade policy “appears to have peaked since ‘Liberation Day’” in April 2025, a development which could support business capital expenditure plans.

“However, a sharp correction in global financial markets on stretched AI-related valuations remains a key risk that could derail investment activity and result in looser labour market conditions,” it noted.