Kuala Lampur:Singapore's economy is projected to experience a slight moderation in growth, with a forecast of 4.8% in 2026, compared to 5.0% in the previous year. This change is driven by an electronics upcycle led by artificial intelligence (AI), as noted by the ASEAN+3 Macroeconomic and Research Office (AMRO).

According to BERNAMA News Agency, AMRO's lead economist and mission chief, Runchana Pongsaparn, stated that Singapore's exports and investments are benefiting from the strong global demand for AI-related products. However, challenges such as higher global oil prices and slowed demand due to the West Asia conflict might impact growth.

Pongsaparn mentioned the possibility of revising the growth projection after the upcoming release of the third-quarter gross domestic product (GDP) figures. She also highlighted that Singapore's annual inflation is expected to rise to 2.1% this year from 0.9% in 2025, influenced by increased global energy and commodity prices, with further adjustments anticipated in electricity tariffs.

Despite these pressures, underlying inflationary concerns have been largely managed through a strong Singapore dollar and targeted subsidies. Pongsaparn emphasized that the West Asia conflict remains a significant downside risk to Singapore's projected growth, along with uncertainties from potential weaker AI demand and ongoing U.S. trade restrictions.

Additionally, she pointed out that structural challenges such as geoeconomic fragmentation, population aging, energy sustainability pressures, and uneven AI adoption could affect long-term growth and competitiveness, necessitating accelerated structural reforms.

Meanwhile, AMRO's chief economist, Dong He, noted that Singapore is in a strong position to enhance regional integration as the ASEAN Chairman in 2027, thanks to its robust regulatory framework and advancements in financial innovation. Singapore is also seen as pivotal in bolstering ASEAN's energy security.