Singapore's economy performed better than expected in the third quarter, prompting authorities to nearly double this year's growth forecast to around 4%. However, economic activity is expected to slow next year as U.S. tariffs impact global trade.

The Ministry of Trade and Industry stated on Friday that economic growth will moderate to a range of 1%-3% in 2026. This marks the first official outlook provided for 2026.

"In 2026, the effects of U.S. tariffs are projected to become more pronounced, likely resulting in slower GDP growth across most of Singapore's key trading partners compared to 2025," the ministry said in a statement. "The deceleration in major economies will dampen demand for Southeast Asian exports."

Final data showed third-quarter GDP expanded 4.2% year-on-year, exceeding the 4% consensus forecast in a Bloomberg survey and following a revised 4.7% growth in the previous quarter.

On a seasonally adjusted quarter-on-quarter basis, GDP grew 2.4%, matching survey estimates and accelerating from a revised 1.7% expansion in the preceding three months.