Singapore’s economy grew by more than 5 percent in its latest quarter, according to advance government estimates released on Wednesday. The 5.4 percent year-on-year rise for July to September kept the city-state among the fastest-growing advanced economies, a result driven largely by artificial intelligence demand.
That pace was slower than the 6.2 percent expansion recorded in the second quarter, the estimates showed.
Manufacturing and construction lead the gains
Manufacturing, where the semiconductor industry plays the dominant role, rose 7.5 percent, the Ministry of Trade and Industry said. Higher output in electronics, precision engineering, transport engineering and general manufacturing clusters provided the main push, offsetting declines in chemicals and biomedical sectors.
Construction, which includes AI-related investment such as data centres, expanded 8.8 percent, according to the same figures.
Central bank holds policy steady on AI outlook
The Monetary Authority of Singapore left its monetary policy settings unchanged on Wednesday. It cited expectations that AI demand will cool in 2027, and said it expected core inflation to average 1.5–2.0 percent in 2026. The authority manages policy through currency exchange rates rather than interest rates.
In a statement, the central bank said: “Global AI-driven growth is expected to ease in the latter half of next year from its current exceptional pace, while higher interest rates, amid elevated inflation in the advanced economies, would weigh on final demand growth.”
Chip sector strength and economists’ views
Government figures show Singapore accounts for roughly 10 percent of global semiconductor output and 20 percent of semiconductor equipment production. The chip sector has helped the economy withstand uneven conditions, including the energy shock triggered by the US-Israel war on Iran.
Yeow Hwee Chua, an assistant professor of economics at Nanyang Technological University, called the performance “impressive for a high-income economy, especially given the uncertain global environment”. “The global technology investment boom has been an important driver,” Chua said, adding that strong electronics demand had supported manufacturing and related wholesale trade.
The International Monetary Fund’s latest forecast puts Singapore’s growth at 5 percent in 2026, faster than any other advanced economy except Taiwan. The city-state grew 5 percent in 2025, its second straight year above that level and the first such run since 2010 and 2011.
