Singapore\u2019s 4Q25 GDP was revised higher, lifting full-year 2025 growth to 5.0%. UOB upgraded its 2026 GDP forecast to 3.6% from 2.6%, and the Ministry of Trade and Industry raised its 2026 forecast range.<\/p>\n
MTI\u2019s Composite Leading Index rose in 4Q25 to 3.7% quarter-on-quarter, from 3.2% in 3Q. This points to stronger seasonally adjusted quarter-on-quarter GDP growth in 1Q26.<\/p>\n
UOB\u2019s baseline assumes robust seasonally adjusted quarter-on-quarter growth in 1Q26, weaker in 2Q26, and very soft increases in 3Q\u20134Q26. Under this baseline, the output gap is projected to remain positive in 2026 at 1.0%, compared with 1.2% in 2025.<\/p>\n
A positive output gap supports expectations of a one-off Monetary Authority of Singapore move in April 2026. The scenario described is a 50 bps steepening of the S$NEER policy band slope to 1.0% per year, aimed at bringing the S$REER closer to equilibrium rather than starting a series of tightening steps.<\/p>\n
We are seeing Singapore’s economy perform significantly better than previously thought, following a major upward revision to the fourth-quarter 2025 GDP figures. This revision boosted the full-year growth for 2025 to a strong 5.0%. As a result, we have upgraded our 2026 growth forecast to 3.6%, recognizing the powerful momentum carrying into this year.<\/p>\n
This positive outlook is supported by the latest data coming in for early 2026. For instance, January’s manufacturing PMI registered a solid 50.8, marking the fifth consecutive month of expansion and signaling robust factory activity. Furthermore, non-oil domestic exports (NODX) in January grew 4.5% year-on-year, handily beating expectations and showing sustained external demand.<\/p>\n
The strength of the economy, reflected in a positive output gap, points directly toward a policy response from the Monetary Authority of Singapore (MAS). With core inflation in January ticking up to 3.3%, the pressure on the central bank to act is building. We therefore expect the MAS to tighten its monetary policy at the upcoming April meeting.<\/p>\n
The most likely action will be a steepening of the S$NEER policy band’s slope, effectively allowing the Singapore dollar to appreciate at a faster rate against its trading partners. Historically, we have seen the SGD strengthen in the weeks leading up to such pre-announced tightening moves, as was the case during the policy shifts back in 2022. This suggests a window of opportunity is now open.<\/p>\n
For traders, this creates a clear directional bias in the weeks ahead. Positioning for a stronger Singapore dollar through derivative instruments like call options on the SGD against the USD seems prudent. Given the widespread expectation of a move, implied volatility may also rise, potentially benefiting long-option strategies.<\/p>\n
However, we view this as a probable one-off adjustment to guide the currency back towards its fundamental equilibrium, not the beginning of a prolonged tightening cycle. Therefore, derivative strategies should likely be timed with expirations around or shortly after the April policy decision. This would capture the anticipated run-up in the currency while managing risk against the possibility that the MAS signals a pause thereafter.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Singapore\u2019s 4Q25 GDP revision lifted 2025 growth to 5.0%, supporting outlook for a one-off MAS move.<\/p>\n","protected":false},"author":62,"featured_media":17028,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41528","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t