AI and Construction Spending Drive Upgrade in Singapore's Growth Forecast

A number of leading research institutions have raised Singapore’s growth projections, pointing to resilient economic activity, sustained investment related to artificial intelligence (AI), and a rapid upturn in the construction sector, while easing tensions in the Middle East have reduced downside risks for the export-dependent economy. DBS Group Research raised its real gross domestic product (GDP) growth forecast for Singapore to 4.3 per cent in 2026 and 3 per cent in 2027, up from 2.8 per cent and 2.3 per cent respectively. “The de-escalation of US-Iran tensions reduces stagflationary pressures and downside risks to growth. The sustained global AI cycle, financial services momentum, and a rapid upturn in construction are supporting the positive outlook,” DBS stated. The research house noted that Singapore’s economy remains resilient despite geopolitical shocks from the Middle East conflict and is expected to close the first half of 2026 with a solid performance, providing positive momentum for the remaining months of 2026. Maybank Investment Bank also said it expects Singapore’s GDP to grow 4.6 per cent in 2026, above the government’s official forecast range of 2 to 4 per cent. The bank said the impact of the Gulf conflict on growth and inflation is limited, adding that strong first-quarter GDP growth of 6 per cent supports the upgraded projection. According to Maybank, strong global AI capital expenditure and a rapid upturn in the construction sector are helping to cushion pressures from high energy prices and supply disruptions related to the Middle East conflict. Separately, UOB Global Economics and Markets Research raised its 2026 Singapore GDP growth forecast to 4 per cent from 3.2 per cent previously, stating that the positive AI-related trend is likely to persist at least until the third quarter. UOB projects second-quarter GDP growth of 0.6 per cent quarter-on-quarter and 5 per cent year-on-year. The research house added that easing Middle East tensions and the gradual normalisation of energy flows through the Strait of Hormuz have reduced downside risks for Singapore’s economic growth outlook.