Singapore recorded economic growth of more than 5 percent in the most recent quarter, driven by a persistent artificial intelligence boom. Gross domestic product expanded by 5.4 percent year-on-year between July and September. Advance government estimates released on Wednesday showed the figure dropped slightly from a 6.2 percent expansion recorded in the second quarter.
The Ministry of Trade and Industry reported that the manufacturing sector grew by 7.5 percent. This industry is dominated by the city-state’s semiconductor sector. Increased output across electronics, precision engineering, transport engineering and general manufacturing clusters drove the gains, offsetting declines in the chemicals and biomedical sectors.
Construction activities expanded by 8.8 percent. Government figures indicated this growth included investments linked to artificial intelligence, such as data centres.
The central bank left its monetary policy settings untouched on Wednesday despite the rapid expansion. Officials cited expectations that artificial intelligence demand will cool down next year. The Monetary Authority of Singapore manages policy through currency exchange rates instead of interest rates. The authority stated it expected core inflation to average between 1.5 and 2.0 percent through 2026.
Global artificial intelligence-driven growth is expected to ease in the latter half of next year from its current exceptional pace, the central bank said in a statement. Officials added that higher interest rates and elevated inflation in advanced economies would weigh on final demand growth.
Singapore operates as a major global player in the booming chip sector. This standing has helped the nation navigate choppy economic conditions, including the energy shock prompted by the United States and Israeli war on Iran.
Government data shows the Southeast Asian territory accounts for roughly 10 percent of global semiconductor output. It also produces 20 percent of global semiconductor equipment.
Yeow Hwee Chua, an assistant professor of economics at Nanyang Technological University, described the performance as impressive for a high-income economy. He said the resilience was strong given the uncertain global environment.
The global technology investment boom has been a key driver, Chua said. Strong demand for electronics has supported manufacturing and related wholesale trade, illustrating how Singapore benefits from its position in global supply chains.
The International Monetary Fund forecasts Singapore’s economy to grow by 5 percent across 2026. This pace would make it faster than any other advanced economy except Taiwan.
Gross domestic product grew by 5 percent in 2025. That marked the second straight year of growth above 5 percent, representing the first such streak since 2010 and 2011.
