SINGAPORE – Singapore’s economy is expected to expand by 4.5 per cent to 5.5 per cent in 2026, sharply higher than the earlier forecast of 2 per cent to 4 per cent on the back of stronger-than-expected growth in the first half of the year.
The Ministry of Trade and Industry (MTI) said on Aug 11 that since its previous forecast made in May, the global AI investment boom has exceeded expectations and provided significant tailwinds to AI-related production and exports globally.
For the rest of 2026, a further acceleration in AI-related capital expenditure is expected to lift the growth prospects of economies plugged into the global technology value chain.
In the second quarter of 2026, Singapore’s economy expanded by 5.9 per cent on a year-on-year basis, easing from the 6.3 per cent growth in the previous quarter.
On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 1.4 per cent, extending the first quarter’s 1.2 per cent growth.
For the first half of 2026, Singapore’s gross domestic product (GDP) growth came in at 6.1 per cent year on year.
Compared with a year earlier, GDP growth in the second quarter was driven by the strong performance of the manufacturing, wholesale trade and finance and insurance sectors.
In particular, robust global AI-related demand boosted growth in the electronics and precision engineering clusters of the manufacturing sector, as well as the machinery, equipment and supplies segment of the wholesale trade sector.
Expansion in the finance and insurance sector was driven by the banking segment on the back of strong credit growth and fee-generating activities.
By contrast, the food and beverage services sector contracted, partly due to a sustained increase in outbound travel by locals and a decline in visitor arrivals during the quarter.
In May, MTI maintained its economic growth projection for 2026 within the 2 per cent to 4 per cent range, flagging downside risks from the Middle East conflict despite a strong first-quarter performance.
