Singapore Raises 2026 Growth Forecast to 4.5-5.5% on AI Investment Boom

Singapore has raised its economic growth projection for 2026 to a range of 4.5 to 5.5 percent, up from a previous forecast of 2 to 4 percent. The upgrade, announced by the Ministry of Trade and Industry, reflects a better-than-expected performance in the first half of the year and an improved outlook for the remainder of 2026. The ministry attributed the brighter prospects to an acceleration in global capital expenditure related to artificial intelligence (AI). The economy expanded by 6.1 percent year-on-year in the first half of 2026. Gross domestic product grew 5.9 percent year-on-year in the second quarter, moderating from the 6.3 percent growth recorded in the previous quarter. Growth was driven by the manufacturing, wholesale trade, and finance and insurance sectors. The ministry stated that strong global demand for AI boosted activity in the electronics and precision engineering clusters within manufacturing, as well as the machinery, equipment, and supplies segment in wholesale trade. Since the ministry last maintained its 2-4 percent growth forecast in May, a stronger-than-expected surge in global AI investment has provided a significant boost to AI-related production and exports worldwide. However, the ministry warned that downside risks to the global economy persist, including those arising from the conflict in the Middle East, additional US tariff policies, and a sudden shift towards risk aversion in financial markets related to global AI capital expenditure. Amid these conditions, the outlook for Singapore’s economic sectors linked to the AI-driven technology cycle has improved, although the outlook for sectors directly affected by supply disruptions from the Middle East conflict remains weak.