Singapore’s 4Q25 GDP growth was revised to 6.9% year on year and 2.1% quarter on quarter (seasonally adjusted), from 5.7% year on year and 1.9% quarter on quarter in advance estimates. The change was driven by higher manufacturing output and stronger services and construction activity.
Full-year 2025 growth was revised up to 5.0% from 4.8%. The update supported a firmer growth profile going into 2026.
Growth Outlook And Key Drivers
The Ministry of Trade and Industry upgraded its 2026 GDP growth forecast range to 2.0% to 4.0%, from 1.0% to 3.0% previously. The research note links the improved outlook to ongoing AI-related activity and changes to the government’s medium-term growth assumptions.
Given the government’s upgraded 2026 growth forecast to a range of “2.0 to 4.0 per cent,” we should position for continued bullish momentum in Singapore-linked assets. The confirmation of stronger-than-expected growth in late 2025, driven by the AI sector, provides a solid foundation for this outlook. This positive revision serves as a key signal for our strategies in the coming weeks.
We see this as a clear opportunity to increase long exposure through Straits Times Index (STI) futures, as corporate earnings are likely to follow the strong economic trend. Recent data backs this up, with January 2026 manufacturing PMI holding firmly in expansionary territory at 50.8. We can also buy call options on the STI, targeting moves towards the 3,500 level by the end of the quarter.
The robust GDP figures from 2025, culminating in 5.0% full-year growth, will likely support a stronger Singapore dollar. With recent core inflation data for January 2026 edging slightly higher to 3.1%, the Monetary Authority of Singapore has little reason to ease its policy of gradual currency appreciation. We should consider buying SGD against the USD through futures or options contracts.
Volatility Positioning And Premium Strategies
This clear and positive economic picture is likely to suppress market volatility as uncertainty decreases. Looking back at similar periods of stable growth in 2017 and 2018, we saw implied volatility on STI options trend lower for months. Therefore, selling out-of-the-money puts on major Singaporean blue-chip stocks or index ETFs could be a prudent way to collect premium.
