PUBLISHED ONDecember 31, 2025 10:00 AMBYKoh Xing YingAmid global tensions, Singapore's economy performed better than expected in 2025, growing by 4.8 per cent, said Prime Minister Lawrence Wong on Wednesday (Dec 31).
However, he cautioned that sustaining this pace of growth would be challenging and that Singapore "must rethink, reset, and refresh" its economic strategies.
"To remain competitive, we cannot simply do more of the same," he said.
In his New Year message, PM Wong said that Deputy Prime Minister Gan Kim Yong will lead a team of younger officeholders in this effort, with their first set of proposals to be released soon and the Government set to respond at Budget 2026.
PM Wong also noted that 2025 was a significant year for the Republic. "We commemorated 60 years of nation building — an extraordinary milestone for a country that few had expected to survive, much less succeed."
In his message, PM Wong highlighted that 2025 marked a major turning point in the global order of open markets and win-win cooperation, with countries reconfiguring trade networks and supply chains.
The world is less predictable and secure, with deepened geopolitical tensions he said, citing the war in Ukraine and the situation in Gaza, as well as the recent border clashes between Thailand and Cambodia.
"In many parts of the world, tensions rooted in identity and belief continue to spill over into violence."
Despite external troubles, Singapore's economy did well on the the back of global economic growth, which was more resilient than expected, said PM Wong.
US tariffs were imposed later and at lower levels, and the Singapore economy benefitted from an AI-related surge in demand for semiconductors and electronics. Unemployment and inflation remained low, while real incomes have risen across the board, he pointed out.
However, he cautioned that fractured trade and geopolitical tensions are not transient problems, but instead permanent features of a fragmented world.
"We will face more obstacles to growth, and inflationary pressures may intensify. As a small and open economy, Singapore cannot fully shield ourselves from these headwinds," he said.
"There will be more challenges and unknowns on the road ahead, but we can press on confidently — because we are dealing with them from a position of strength," he added.
PM Wong also pointed out that Singapore's strong international reputation continues to open doors for businesses and entrepreneurs.
"Amidst global uncertainties, many companies are seeking stability and turning to Singapore as a trusted base."
For instance, Microsoft has set up an AI research lab in Singapore, their first in Southeast Asia, he noted. And more start-ups and growth companies are making Singapore their launchpad into the region.
"We have a window of opportunity to attract and anchor more dynamic enterprises," said PM Wong.
As Singaporean firms expand overseas, the Government will continue to support them as they scale up, he added.
On the domestic front, PM Wong said the Government's focus remains firmly on improving lives. "Economic success is a means to an end. What matters is that every Singaporean benefits from the nation's progress," he said.
The Government, along with employers and the labour movement, will help workers grow and progress in their careers, he added.
"Beyond jobs, we will continue improving the basics in life – education, housing, and healthcare — so every Singaporean has security and peace of mind," he said, adding that the Government will also reinforce social safety nets to ensure that no one is left behind.
Looking ahead, PM Wong highlighted three longer-term challenges: falling birth rates, an aging population, and clean energy.
Firstly, the Government will support young Singaporeans who want to settle down and have children by addressing their concerns — from housing to childcare and education.
"We will create an environment where families can grow and thrive, and society remains vibrant and forward-looking. This also means staying open, and welcoming those who embrace our way of life as our fellow citizens," he said.
Secondly, to prepare for longer lifespans and its implications on healthcare, work and retirement, a Tripartite Workgroup on Senior Employment is looking at strategies to allow seniors to work meaningfully in age-friendly workplaces.
Thirdly, the Government will secure a reliable supply of clean energy to power the energy-intensive industries of the future, including Artificial Intelligence, said PM Wong.
This includes importing green energy, working towards an Asean Power Grid, and pursuing clean solutions such as low-carbon hydrogen and possibly nuclear energy.
Noting how Singapore overcame the existential threat of water in its early years, PM Wong said: "Through hard work and ingenuity, we created NEWater. Now, clean energy is our new frontier and next major challenge. Just as we did with water, we must turn this vulnerability into a source of strength."
As the country tackles the complex challenges ahead, PM Wong urged Singaporeans not to allow differences to divide them. "Instead, we must harness our diverse perspectives to chart a new path forward — as one united people."
Making reference to the recently launched Albatross File exhibition, the prime minister also reflected on how the Singapore Story began — with agonising choices confronting the founding leaders.
"Nothing about our survival was inevitable. Nothing about our success was assured," he said.
"That we emerged from those turbulent beginnings to become a stable, prosperous and united nation is nothing short of a miracle. A miracle not based on chance, but shaped by the courage and grit of all Singaporeans," he added.
Noting that the world today "feels darker and more dangerous than before", PM Wong pointed out that Singapore has always found strength in adversity.
"We endured and progressed because we refused to be defeated — because we faced challenges together, with courage and quiet determination. Sustaining the Singapore miracle requires the same spirit from all of us today."
Referencing the Singapore men's national football team's first ever qualification for the Asian Cup, and Team Singapore athletes' performance at the SEA Games, PM Wong said: "These achievements remind us that when we stay focused and keep pushing on, we can overcome setbacks, rise above adversity and face uncertainty with confidence.
"Let us carry this mindset into the new year — resilient and united, determined and hopeful — as we write the next chapter of our Singapore Story together."
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