SINGAPORE: Despite government projections that economic growth would slow as Singapore's economy matures, the country has defied expectations for two consecutive years.

In 2025, Singapore's economy expanded 5 per cent, exceeding forecasts even after the Ministry of Trade and Industry (MTI) upgraded its projections twice – in August and November. The year before, growth hit 5.3 per cent.

This marks the first time since 2010 and 2011 that Singapore has sustained annual growth above 5 per cent for two straight years.

On Tuesday (Feb 10), MTI raised its 2026 forecast to between 2 and 4 per cent, up from the previous forecast of 1 to 3 per cent.

CNA examines what drove this exceptional performance and whether Singapore can maintain its momentum.

How did Singapore do so well?

MTI attributed 2025's robust GDP expansion primarily to manufacturing, wholesale trade, and finance and insurance sectors.

The electronics cluster and machinery, equipment and supplies segment experienced particularly strong growth, driven by surging demand for artificial intelligence-related electronics. 

Accommodative financial conditions supported growth in the finance and insurance sector.

Ms Selena Ling, chief economist and head of group research at OCBC, highlighted "very broad-based sectoral growth", citing robust foreign direct investment and safe haven capital inflows into Singapore.

Beyond semiconductors, construction remained resilient with strong public and private sector pipelines, while pharmaceuticals also contributed significantly, she added.

Singapore also benefited from "competitively lower" tariffs on exports to the United States compared to other Southeast Asian economies, Ms Ling noted.

Standard Chartered economists said relatively benign global monetary and fiscal conditions, robust AI-related demand, tariff truces and lower effective tariff rates likely combined to boost economic activity.

How unusual is this performance?

Economists agreed that Singapore's GDP performance over the past two years has been exceptional for a developed economy.

In recent history, Singapore has only recorded such high growth rates when recovering from major crises, said Ms Lee Yen Nee, senior country risk analyst at BMI Research.

"Last year, this growth rate was achieved without a preceding crisis, and it was almost entirely driven by the global capital...