Singapore: The Ministry of Trade and Industry (MTI) has raised Singapore's 2026 gross domestic product (GDP) growth forecast to between 4.5 and 5.5 per cent, raising it from an earlier projection of 2.0-4.0 per cent.
According to BERNAMA News Agency, the forecast is based on a stronger-than-expected performance in the first half of 2026 and an optimistic outlook due to increased global artificial intelligence (AI) capital expenditure. Singapore's economy grew by 5.9 per cent year-on-year in the second quarter of this year, resulting in a 6.1 per cent year-on-year growth for the first half.
MTI reported that the second-quarter GDP growth was fueled by the manufacturing, wholesale trade, and finance and insurance sectors. Specifically, the electronics and precision engineering clusters of manufacturing, and the machinery, equipment, and supplies segment of wholesale trade, benefited from strong global AI-related demand. Additionally, the finance and insurance sector saw growth driven by the banking segment, which capitalized on strong credit growth and fee-generating activities.
According to MTI, the global AI investment increase has been more significant than anticipated, with further acceleration in AI-related capital expenditure expected to enhance the growth prospects for economies integrated into the global technology value chain. The economic impact of the conflict in West Asia has also been milder than initially expected. However, ongoing tensions in the region and lower global oil inventories are predicted to maintain high energy and key input prices in the second half of 2026.
The ministry highlighted remaining global economic risks, including potential escalation of the West Asia conflict, additional tariff actions from the United States, and sudden negative shifts in financial market sentiments. Despite these challenges, the 2026 outlook for Singapore's AI-driven technology sectors has improved, although sectors directly affected by supply disruptions from the West Asia conflict face a weaker outlook. The US tariffs are likely to continue impacting the exports of affected economies.