Staff Reporter
Published:
Photo from Magnific
Technology-related sectors drove 75% of Q3 GDP growth.
Singapore's economy is expected to continue expanding steadily in the coming quarters, supported by strong order backlogs and capacity expansions in artificial intelligence (AI)-related production,
“The AI-led expansion remains relatively well-anchored into 2027,” the Monetary Authority of Singapore (MAS) said in its October Macroeconomic Review.
However, it noted that AI-related activity is projected to moderate in the latter half of next year, although technology-related sectors are expected to remain a key driver of economic growth.
GDP grew 5.4% year-on-year (YoY) in the third quarter, easing from 6.2% in the preceding quarter.
Technology-related sectors accounted for around 75% of overall GDP growth, whilst construction, financial services, and real estate activities remained firm.
MAS said global semiconductor sales rose 145% YoY in July and August, on the back of strong memory price growth, whilst estimated sales volumes increased by 16%.
Meanwhile, significant semiconductor production capacity additions are expected in 2027 and 2028, including Micron's new high-bandwidth memory advanced packaging facility and capacity expansions by GlobalFoundries and UMC.
“As additional production capacity comes onstream, firms could ramp up output further, potentially leading to another wave of strong semiconductor production growth,” MAS said.
However, the authority pointed out growing financial risks amongst major AI hyperscalers, whose cash flows have come under pressure from rising capital expenditure commitments.
These firms have increasingly relied on external financing, including bond markets, private credit funds, and special-purpose vehicles, to finance AI infrastructure investments, it added.
“Whilst this points to rising downside risks, current strains remain short of levels that would suggest an imminent retrenchment in AI investment,” MAS said.
Outside technology-related sectors, construction activity is expected to remain strong in 2027, supported by major infrastructure projects, whilst financial services activity should continue expanding.
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