Singapore’s economy expanded by 5.4% year on year in the third quarter of 2026, moderating from a 6.2% growth rate in the prior quarter, according to data released on October 14 by the Ministry of Energy, Trade and Industry (METI). The growth exceeded market expectations, which had forecast a 5.1% increase in a Bloomberg poll.
On a seasonally adjusted quarter-on-quarter basis, the economy grew by 1.1% during the third quarter, easing from 1.5% in the second quarter. The manufacturing sector’s growth slowed to 7.5% from 12.9% in the previous quarter, while construction activity accelerated, expanding by 8.8%, compared with 6.3% previously, driven by increases in both public and private sector projects.
Within services, the wholesale and retail trade sector along with transportation and storage collectively posted an 8% year-on-year rise, up from 6.9% in the earlier quarter. This growth was supported by strong performances in the wholesale trade’s machinery, equipment and supplies segment, which benefited from robust electronics exports, and by the transportation sector’s water and air transport activities. The sector recorded a 2.2% increase on a seasonally adjusted quarter-on-quarter basis, up from flat growth in the previous quarter. However, retail trade was the only segment within this group that did not see expansion during the quarter.
The group consisting of information and communications, finance and insurance, and professional services expanded by 4.3% year on year, down from 5.1% earlier. All sectors within this group posted gains, powered by growth in IT and information services, fund management and banking, as well as architectural, engineering, and technical testing services. On a seasonally adjusted quarter-on-quarter basis, these sectors grew by 0.4%, a slowdown from 2.8% growth in the previous quarter.
Other service sectors, including accommodation and food services, real estate, and administrative services, rose 2.1% year on year, slightly less than the 2.4% gain in the prior quarter. Within this group, the accommodation sector was boosted by increased activity in higher-value hotel segments, while food and beverage services declined. Quarterly adjusted growth in these sectors moderated to 0.6% from 0.8%.
Economists noted the economy’s dual-speed expansion, with sectors tied to advanced electronics, trade, transportation and construction outperforming, while consumer-oriented and domestic services faced headwinds. Selena Ling, chief economist and head of OCBC group research, highlighted the sharp acceleration in construction and strength in trade and transportation services driven by regional trade and AI-related electronics demand. Conversely, consumer-facing sectors were hampered by tightening financial conditions.
Market analyst Zavier Wong at eToro pointed out that robust overall growth had yet to translate into widespread wage gains for households. He noted that many new jobs have been filled by foreign workers, and fewer firms planned wage increases as of July. Inflation remained elevated, with core inflation at 2.1% in July and August, contributing to softness in retail and food services. Wong also observed that an October electricity tariff cut would likely offer only temporary relief amid rising fuel prices, with further increases possible early next year. He expects consumer-facing sectors to remain subdued until inflation eases, which the Monetary Authority of Singapore projects to occur around mid-2027.
Wong forecast METI will raise its 2026 GDP growth forecast in November, revising the current 4.5% to 5.5% range upward based on the strong performance in the first three quarters. He noted that average growth through September was about 6%, with the second quarter’s growth rate revised upward to 6.2%.
METI will release detailed preliminary GDP estimates for the third quarter, including sector performance, inflation, employment, and productivity data, as part of the Economic Survey of Singapore in November 2026.