Singapore Maintains 2026 GDP Growth Forecast At 2.0-4.0 Pct

By Anas Abu Hassan

SINGAPORE, May 25 (Bernama) -- Singapore’s economy is expected to maintain growth of 2.0 per cent to 4.0 per cent in 2026 despite rising downside risks of the West Asia conflict, according to the Ministry of Trade and Industry (MTI).

MTI said the republic’s gross domestic product (GDP) grew by 6.0 per cent year-on-year in the first quarter (1Q) of 2026, extending the 5.7 per cent expansion in the previous quarter.

“Nonetheless, downside risks to Singapore’s economic outlook have risen significantly, and MTI will continue to monitor developments closely and adjust the GDP growth forecast over the course of the year if necessary,” it said in a statement on Monday.

The ministry stressed that downside risks include disruptions to the global supply of energy and other inputs; a renewed escalation in US tariff actions; and an escalation in risk-off sentiments or a sudden pullback in global artificial intelligence (AI)-related capital spending.

According to MTI, Singapore's GDP growth in 1Q was driven by strong performance in the wholesale trade, manufacturing, and finance and insurance sectors. 

“In particular, robust AI-related demand led to growth in the machinery, equipment and supplies segment of the wholesale trade sector, as well as the electronics and precision engineering clusters within the manufacturing sector,” it said.

Meanwhile, growth in the finance and insurance sector was broad-based, with steady performance in the banking, fund management and security dealing segments. 

“By contrast, the higher prices of, and shortages in, crude oil and its derivatives arising from the United States-Israel-Iran conflict contributed to contractions in the fuels and chemicals segment of the wholesale trade sector and the chemicals cluster of the manufacturing sector,” it added.

In addition, MTI highlighted that the global economic outlook has deteriorated since February with the onset of the US-Israel-Iran conflict.

It noted that disruptions to the supply of energy and other key inputs, such as fertiliser and aluminium, due to the blockade of the Strait of Hormuz have led to a spike in global energy and other input costs. 

“This has driven up inflationary pressures, which are expected to erode real incomes and dampen consumption, as well as cause a tightening in global financial conditions.

“These factors will weigh on global economic activity for the rest of the year,” it said.

Meanwhile, MIT said AI-related demand has remained robust and should continue to support the growth of regional economies throughout the year.

“Taking into account these developments, Singapore’s external demand outlook for the year has weakened compared to the assessment in February,” it noted.

-- BERNAMA