Singapore’s Economy Grows 5.4% in the Third Quarter, Beating Forecasts, With Construction Up 8.8%

Manufacturing grew 7.5 per cent year on year, slower than the 12.9 per cent in the second quarter. Construction expanded 8.8 per cent, faster than 6.1 per cent, as both public and private-sector construction output rose.

Among services, wholesale and retail trade, and transportation and storage collectively grew 8 per cent, extending 6.9 per cent growth in the previous quarter, led by machinery, equipment and supplies in wholesale trade and by water and air transport. Information and communications, finance and insurance, and professional services grew 4.3 per cent, easing from 5.1 per cent. The remaining group, which includes accommodation and food services, real estate, administrative and support services, and other services, grew 2.1 per cent, extending 2.4 per cent in the second quarter, with the accommodation sector helped by higher gross lettings in the higher value-added hotel segments. All sectors in that group expanded except food and beverage services. On a quarter-on-quarter basis this group grew 0.4 per cent, moderating from 0.8 per cent.

OCBC chief economist Selena Ling said growth continues to be driven by artificial intelligence and electronics-related activity, trade and transportation services, and construction and infrastructure. Construction growth accelerated sharply, supported by both public and private activity. She described “a dual-speed expansion”, with businesses linked to construction, trade and advanced electronics set to keep benefiting while consumer-oriented sectors face a more challenging environment, especially on costs and tightening financial conditions.

Zavier Wong, market analyst at eToro, said the growth has yet to reach many households, pointing to growth driven by electronics exports and construction, foreign workers accounting for most of the new jobs created in the second quarter, and slightly fewer firms planning to raise wages in July. Core inflation rose to 2.1 per cent in July and August, and retail trade and food and beverage services were the only sectors that did not expand. He said the October electricity tariff cut is likely to be only temporary relief and that consumer-facing sectors will probably stay soft until core inflation eases, which the Monetary Authority of Singapore (MAS) puts at mid-2027.

Wong expects METI to raise its 2026 growth forecast in November from the current range of 4.5 to 5.5 per cent. Growth in the first three quarters averaged about 6 per cent, with second-quarter growth revised up from 5.9 to 6.2 per cent. To stay inside the current range, he said, the fourth quarter would have to stop growing altogether, which is unlikely. METI will release the preliminary third-quarter details in the Economic Survey of Singapore in November.