Singapore posts stronger-than-expected 4.8% growth in 2025, but PM Wong cautions against complacency

However, Prime Minister Lawrence Wong cautioned that sustaining this pace of growth will be increasingly difficult in a more fragmented and uncertain world.

In his New Year message on Dec 31, Wong described the growth outcome as “better than we expected, given the circumstances”, noting that it surpassed last year’s 4.4 per cent expansion. 

The figure also exceeded the 4.1 per cent projection by private sector economists and the Monetary Authority of Singapore’s forecast of around 4 per cent. Yet the prime minister struck a note of realism.

“Sustaining this pace of growth will be challenging,” he said, warning that Singapore cannot rely on existing economic playbooks to remain competitive. 

“We cannot simply do more of the same. We must rethink, reset and refresh our economic strategies.” Wong said Deputy Prime Minister and Trade and Industry Minister Gan Kim Yong is leading a team of younger political office holders to chart the next phase of economic strategy. 

Their initial proposals are expected to be released soon, with the government set to respond at Budget 2026. The stronger performance in 2025 was underpinned by greater-than-expected global resilience, Wong said.

US tariffs were imposed later and at lower levels than feared, easing pressure on trade flows. Singapore also benefited from a surge in demand for semiconductors and electronics, driven by the global boom in artificial intelligence. 

“As a result, unemployment and inflation remained low, and real incomes have risen across the board,” he said. However, Wong stressed that fractured trade relations and geopolitical tensions are no longer temporary shocks but “permanent features of a fragmented world”.

As a small and open economy, Singapore will face more obstacles to growth and heightened inflationary pressures that it cannot fully insulate itself from. 

The prime minister described the past year as a “major turning point” in the global order, with longstanding assumptions about open markets and win-win cooperation increasingly questioned or rejected. 

Countries are reconfiguring supply chains in the name of resilience and security, while geopolitical conflicts continue to deepen. He pointed to the protracted war in Ukraine, the precarious situation in Gaza, and identity-driven conflicts spilling into violence in various regions.

Closer to home, tensions between Thailand and Cambodia over disputed border areas underscore the fragility of regional stability, even though a ceasefire has been reached. 

“Taken together, these developments have made the world less predictable and secure,” Wong said, adding that Singapore must remain vigilant as security risks evolve. Despite these headwinds, he said Singapore is confronting global uncertainty from a position of strength.

“Singapore’s international standing is high, and our brand is trusted and respected,” he noted, adding that companies continue to see the country as a stable and reliable base. He cited major multinational firms such as Microsoft, alongside startups and growth companies, that are expanding their presence in Singapore. 

During overseas visits, Wong said he has seen firsthand how Singapore’s reputation opens doors for its businesses, from Africa to Latin America. “We will continue to support our companies, as they expand, scale up, and seize overseas opportunities,” he said. 

Focus on inclusive growth at home Domestically, the government remains focused on ensuring that economic progress translates into tangible benefits for all Singaporeans. 

Working with unions and employers, it will continue to support workers in upgrading skills and advancing their careers, Wong said. Beyond employment, the government will keep strengthening the fundamentals of daily life, including education, housing and healthcare, while reinforcing social safety nets to ensure no one is left behind. 

Lower-income families will be supported not only through financial assistance but also through measures that empower them to build long-term stability. Persons with disabilities and their caregivers will receive enhanced support, including better access to services and expanded opportunities for meaningful work and independent living. 

Looking ahead, Wong highlighted longer-term structural challenges, including an ageing population, declining birth rates and the need to secure clean energy. Efforts will continue to support young Singaporeans who wish to marry and have children, addressing concerns around housing, childcare and education. At the same time, Singapore will remain open to those who embrace its way of life, strengthening a cohesive national identity amid demographic change.

On energy, Wong said Singapore must secure reliable clean power to support future industries such as AI. Strategies include importing green energy through initiatives like the ASEAN Power Grid, as well as exploring domestic solutions such as low-carbon hydrogen and nuclear energy. “Just as we turned water from an existential vulnerability into a source of strength with NEWater, clean energy is our new frontier,” he said. 

Wong concluded by urging Singaporeans to face the complex challenges ahead with unity and resolve. “The world today may seem darker and more dangerous than before, but Singapore has always found strength in adversity,” he said. “Sustaining the Singapore miracle will require the same courage, creativity and collective determination that brought us here.”