Singapore Economists Raise 2025 Growth Forecast, See Slower 2026 Ahead

Post by : Saif Nasser

Economists are feeling more positive about Singapore’s economic growth in 2025, according to a new survey released by the Monetary Authority of Singapore (MAS). Strong recent economic data has led forecasters to raise their expectations for next year. However, they also warn that this stronger growth may slow in 2026 as global risks increase.

The MAS survey, conducted in the December quarter and based on responses from 20 economists, shows that the median forecast for Singapore’s growth in 2025 has risen to 4.1%. This is a clear improvement from the earlier estimate of 2.4% in the previous survey. The stronger outlook follows better-than-expected economic performance in recent months.

Singapore’s economy grew by 4.2% in the third quarter compared to the same period last year, beating early estimates and market forecasts. This strong result helped build confidence among economists. In November, Singapore’s trade ministry also raised its official growth forecast for 2025 to around 4.0%, adding further support to the positive outlook.

While 2025 looks strong, economists believe the pace of growth will ease in the following year. Growth in 2026 is expected to slow to about 2.3%. This reflects concerns that global demand may weaken and that current growth drivers, such as trade and technology, may lose some momentum.

The survey highlights several risks that could affect Singapore’s economy. Most economists pointed to rising geopolitical tensions as the main downside risk. As a small and open economy, Singapore is highly sensitive to global conflicts, trade disputes, and disruptions to supply chains.

Another new concern is the risk of an artificial intelligence bubble bursting. About four in ten economists flagged this issue, which was not mentioned in the previous survey. While AI has driven strong investment and optimism in the technology sector, economists warn that sudden changes in investor confidence could hurt growth.

On the upside, a strong AI-led technology cycle and steady global growth could support Singapore’s economy further. If global demand remains resilient, Singapore could benefit from higher trade, investment, and innovation.

When it comes to monetary policy, economists expect stability. All respondents believe the MAS will keep policy unchanged at its upcoming review in January. Most also expect no changes at the April review. Only a small number, about 11%, see a possible tightening of policy by July 2026.

Inflation is expected to remain low in the near term. The survey shows that forecasts for core inflation and headline inflation in 2025 remain unchanged at 0.7% and 0.9%. However, inflation is expected to rise slightly in 2026, with core inflation forecast at 1.3% and headline inflation at 1.5%.

These forecasts are in line with the MAS’s own guidance. In October, the central bank said core inflation should average around 0.5% in 2025, while headline inflation is expected to stay between 0.5% and 1.0%.

Overall, the survey presents a hopeful but cautious picture. Singapore’s economy is set for a strong year in 2025, supported by solid growth and stable policies. At the same time, economists stress the need to stay alert to global risks and future challenges to ensure long-term stability.

#Global News #Global Updates #Global Global News world news #Global Global News world