Singapore's economy grew more than 5% in the most recent quarter, continuing an AI-driven boom that has made the city-state one of the fastest-growing developed economies.
According to preliminary government estimates released on Wednesday, gross domestic product (GDP) rose 5.4% year on year in the July-to-September period, down from 6.2% growth in the second quarter.
Industrial production, dominated by the city-state's semiconductor industry, rose 7.5%, according to estimates from the Ministry of Trade and Industry.
The ministry said increased output in "electronics, precision engineering, transport engineering and general manufacturing" clusters drove growth, offsetting declines in the chemicals and biomedical sectors.
Construction, including AI-related investments such as data centers, rose 8.8%, the figures showed.
Despite the strong growth, Singapore's central bank left its monetary policy settings unchanged in its latest announcement on Wednesday, citing forecasts that AI demand will cool by 2027.
The Monetary Authority of Singapore (MAS), which conducts monetary policy through the exchange rate rather than interest rates, said it expects core inflation to average 1.5–2.0% in 2026.
The central bank said: "AI-led global growth is expected to moderate in the second half of next year from its current exceptional pace, while higher interest rates, amid rising inflation in developed economies, will weigh on final demand growth."
Singapore is a major global player in the booming chip sector, a position that has helped the country weather volatile economic conditions, including the energy shock caused by the US-Israel war with Iran.
According to government figures, the Southeast Asian island nation accounts for about 10% of global semiconductor output and 20% of semiconductor equipment output.
Yeow Hwee Chua, an assistant professor of economics at Nanyang Technological University, described Singapore's economic performance as "impressive for a high-income economy, especially amid global uncertainty".
Chua told Al Jazeera: "The global technology investment wave is a key driver. Strong demand for electronics has supported related manufacturing and wholesale trade, showing that Singapore benefits from its position in global supply chains."
According to the IMF's latest economic forecasts, Singapore's economy is expected to grow 5% in 2026, faster than any other developed economy except Taiwan.
The city-state's GDP grew 5% in 2025, its second consecutive year of above-5% growth – the first such streak since 2010 and 2011.
