Maybank Investment Bank Bhd (Maybank IB) expects the Monetary Authority of Singapore (MAS) to maintain its current modest S$NEER appreciation bias of +0.5% per annum at its October meeting, noting that resilient services and a robust construction sector continue to cushion the manufacturing and export slowdown. The research house also reiterated its GDP growth forecast of +3.2% in 2025 and upgraded its 2026 estimate to +2.5%, reflecting confidence in Singapore’s medium-term economic resilience.
According to Maybank IB economists, Singapore’s GDP growth is projected to ease to +2.4% in the third quarter, down from +4.3% in the first half, as higher US reciprocal tariffs in August weighed on manufacturing. However, they believe the slowdown will be short-lived, supported by strong demand for electronics driven by the global AI investment cycle and lower US tariffs on key Singapore exports such as semiconductors and pharmaceuticals.
“Lower US tariffs with preferential exemptions on Singapore’s exports will limit the impact,” they said, adding that electronics exports could return to positive growth by the fourth quarter and into 2026.
The analysts said the domestic economy remains underpinned by solid fundamentals. Construction is expected to sustain growth of around 6% in 2025 and 2026, buoyed by large-scale infrastructure projects and housing developments. The financial and real estate sectors are benefiting from falling interest rates, which are lifting credit demand and homebuyer sentiment.
Singapore’s liquidity conditions remain ample, with S$ deposit growth rising 11.8% in August despite lower deposit rates, suggesting strong ‘safe haven’ inflows. The local stock market has also been on the rise, with securities turnover up 22.2% in July and August, while IPO fundraising placed the city-state ninth globally at US$1.44 billion.
Maybank IB also highlighted the services sector’s resilience as a key buffer for growth. Visitor arrivals have picked up, with hotel occupancy rates climbing to over 90% in August from 75% in June. The upcoming Formula 1 Grand Prix and China’s Golden Week are expected to further boost hospitality and retail performance in the fourth quarter.
Despite near-term moderation, Maybank IB foresees upside risks to inflation in 2026. The bank expects core inflation to rise to +1.1% and headline inflation to +1.2%, up from 0.5% and 0.8% respectively in 2025. Factors include rising Certificate of Entitlement (COE) premiums, higher property prices and tapering of electric vehicle rebates.
The bank forecasts that the 3-month SORA will decline to 1.1% by end-2025 and 0.7% by end-2026, reflecting the anticipated easing in global monetary conditions.
Regionally, Singapore’s economic trajectory contrasts with broader export weakness across Asia, where economies like Malaysia and South Korea are still grappling with tariff-driven slowdowns and subdued electronics cycles. However, Maybank IB believes Singapore’s diversified services base and early integration into the AI supply chain will allow it to outperform its regional peers through 2026.
