Singapore’s GDP growth in the first three quarters of 2025 has turned out stronger than earlier expected. The economy’s pace of expansion is projected to moderate as the impact from tariffs become more apparent, though there are other factors that could provide some offsetting support to growth. Inflation is low but should trough in the later part of 2025. MAS Core Inflation is forecast to average 0.5% this year and pick up gradually to 0.5–1.5% in 2026. In October, MAS maintained the prevailing modest rate of appreciation of the S$NEER policy band, with no change to the width and the level at which it is centred.

Key Messages

Global and domestic growth has held up for now, but a more discernible slowdown is expected ahead

Global Economy

Global economic activity picked up in Q2 and has remained resilient in recent months, underpinned by trade front-loading, AI-related investments, and generally accommodative financial conditions. However, some early signs of softness are emerging. Labour markets in the advanced economies are beginning to weaken, while export growth in Asia is slowing following the implementation and some escalation of tariffs since August. Looking ahead, an easing in global growth is anticipated as the dampening effects of higher tariffs on production and hiring become more pronounced.

Singapore Economy

Mirroring the global economy, Singapore’s GDP outturn has been stronger than expected, rising by 3.9% y-o-y in Q1–Q3. Growth is expected to slow moderately going forward. Buoyant global AI-related capital spending should provide a base layer of support to the trade-related industries. Domestic manufacturers would be able to continue adjusting prices amid adequate financial buffers, without cutting production significantly.   Singapore’s GDP growth is likely to ease to a near-trend pace in 2026, barring a sudden increase in tariffs or a sharp deterioration in demand conditions.

Inflation to slow further in the near term before picking up modestly

Inflation

Inflation is currently low, driven by declining imported prices and easing domestic unit labour cost growth. Soft consumer demand and heightened competition in some sectors, as well as enhanced government subsidies for some essential services, are also dampening the pace of price increases. Core inflation should edge down further in the near term but pick up gradually thereafter, as the factors temporarily weighing on inflation fade. Going forward, global crude oil prices are expected to fall by less, while domestic unit labour cost growth should pick up next year. The drags on inflation arising from the net effect of administrative price increases and enhanced subsidies will also begin to unwind from late-2025.   Overall, MAS Core Inflation is projected to average around 0.5% for 2025 as a whole, before rising to 0.5–1.5% in 2026. CPI-All Items inflation is expected to average 0.5–1.0% this year and 0.5–1.5% in 2026.

In the October policy review, MAS kept the S$NEER policy band on its prevailing modest and gradual appreciation path

MAS aims to secure low and stable inflation over the medium term by managing the level and path of S$ nominal effective exchange rate (S$NEER) within a policy band.

MAS had eased monetary policy twice earlier this year. Subsequently, Singapore’s economic growth has outperformed expectations. Looking ahead, the Singapore economy will keep close to its potential output, while inflation is expected to rise gradually over 2026 as temporary factors weighing on inflation fade.

MAS therefore maintained the prevailing rate of appreciation of the S$NEER policy band in its October policy review. There was also no change to the width of the band and the level at which it is centred.

Although global policy uncertainty has receded somewhat, risks around the growth and inflation outlook remain. MAS will continue to monitor global and domestic developments closely and is in an appropriate position to respond effectively to risks to medium-term price stability.