Singapore Raises 2026 Economic Forecast on AI and Export 'Fuel'

The Singapore government has sharply raised its 2026 economic growth projection after economic performance in the first half of the year exceeded expectations. Developments in artificial intelligence (AI)-related sectors and exports were among the main drivers.

Singapore’s Ministry of Trade and Industry (MTI) now expects the country’s economy to grow 4.5%-5.5% in 2026, a significant increase from the previous projection of 2%-4%. The latest projection marks the second upward revision made by Singapore this year.

Earlier, at the start of 2026, MTI had still expected the economy to grow by only 1%-3%. MTI said the higher projection reflects stronger-than-expected economic performance during the first half of 2026, particularly driven by AI-related sectors and exports.

Singapore’s economy also showed stronger performance in the second quarter of 2026. The country’s gross domestic product (GDP) grew 5.9% year-on-year, revised up from the initial estimate of 5.7%.

Growth in that period was mainly supported by three sectors: manufacturing, wholesale trade, and finance and insurance.

MTI also assessed that the impact of the United States (US)-Iran conflict on Singapore’s economy has so far been milder than previously expected. The rise in global energy prices is still considered manageable because countries are using available oil reserves and switching to alternative energy sources.

This has helped limit pressure on energy costs for Singapore, which is highly dependent on trade and imports. Nevertheless, inflationary pressure remains a concern.

Singapore’s central bank, the Monetary Authority of Singapore (MAS), surprisingly tightened its monetary policy at the end of July. MAS had previously warned that Singapore’s import costs could potentially rise in the coming quarters due to higher fuel and electronic input prices.

Unfavourable weather conditions in supplier countries could also increase pressure on import prices.

Singapore’s core inflation, which excludes accommodation and transport costs, rose to 1.6% in June from 1.4% in May. Headline inflation stood at 1.9%.

These figures remain near the lower bound of MAS’s core inflation projection range of 1.5%-2.5% for this year.

With stronger-than-expected economic growth, the Singapore government now has greater room to address inflationary pressures while maintaining economic momentum through the end of 2026.