SINGAPORE (Reuters) -Singapore on Friday upgraded its economic outlook for 2025 as third-quarter gross domestic product growth beat market expectations and initial estimates.

GDP rose 4.2% in the third quarter from a year earlier, government data showed, faster than the 2.9% official advance estimate released last month and a median forecast of 4.0% in a Reuters poll of economists.

On a quarter-on-quarter seasonally adjusted basis, GDP expanded 2.4% from the second quarter.

The trade ministry raised its GDP growth forecast for 2025 to "around 4.0%" from a previous range of 1.5% to 2.5%. 

It forecast 2026 GDP growth at 1.0% to 3.0%.

"Global economic conditions have turned out to be more resilient than expected," the ministry said in a statement. "In particular, GDP growth in most of Singapore's key trading partners came in better than expected in the third quarter of 2025."

In a separate statement, Enterprise Singapore said it had narrowed its 2025 non-oil domestic exports growth forecast to "around 2.5%", from growth of 1% to 3%,  as it expected robust AI-related demand and high gold prices to provide some support to shipments in the fourth quarter. 

For 2026, it forecast non-oil exports to grow by 0% to 2%. 

At a review in October, the Monetary Authority of Singapore left monetary policy unchanged as growth in the city-state remained resilient despite challenges from U.S. import tariffs.

Singapore's exports to the United States are subject to a 10% tariff. That is lower than the tariffs imposed on its Southeast Asian neighbours, but sectoral levies - including a 100% tariff on branded drugs - remain a significant concern.

Broader sectoral tariffs could hurt demand for Singapore's exports, including semiconductors, consumer electronics and pharmaceutical goods. The central bank has said those three sectors account for about 40% of exports to the United States.

In October, authorities said the implementation of the branded drugs tariff had been delayed to allow companies to negotiate possible exemptions with the U.S. administration.