Singapore Raises 2026 GDP Growth Forecast To 4.5-5.5 Pct On Stronger Global AI Expenditure Outlook

By Anas Abu Hassan

SINGAPORE, Aug 11 (Bernama) -- 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.

The forecast is premised on a better-than-expected first half (1H) of 2026 performance, as well as an improved outlook due to the acceleration in global artificial intelligence (AI)-related capital expenditure.

MTI said Singapore's economy grew by 5.9 per cent year-on-year (y-o-y) in the second quarter (2Q) this year, bringing the 1H growth to 6.1 per cent y-o-y.

It said the 2Q GDP growth 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.

"Meanwhile, growth in the finance and insurance sector was driven by the banking segment on the back of strong credit growth and fee-generating activities," it said in a statement on Tuesday.

According to MTI, the global AI investment boom has been stronger than expected, and further acceleration in AI-related capital expenditure is expected to boost the growth prospects of economies plugged into the global technology value chain.

The economic impact of the conflict in West Asia has also been less severe than initially feared, it noted.

Nonetheless, continuing tensions in the region, alongside lower levels of global oil inventories, are expected to keep the prices of energy and other key inputs elevated in 2H 2026.

The ministry emphasised that downside risks in the global economy remain, such as a further escalation of the conflict in West Asia, additional United States (US) tariff actions, and sudden risk-off sentiments in the financial market.

"Against this backdrop, the 2026 outlook for sectors of the Singapore economy linked to the AI-driven technology cycle has improved, although the outlook for sectors directly affected by supply disruptions arising from the West Asia conflict remains weak.

"Meanwhile, the US tariffs are expected to continue to weigh on the exports of affected economies, it added.

-- BERNAMA