SINGAPORE: Despite a weakening of the economic outlook in the months ahead and "significant" downside risks arising from the Middle East conflict, Singapore will maintain its 2026 economic growth forecast at 2 to 4 per cent due to a better-than-expected performance in the first quarter.
The economy grew by 6 per cent on a year-on-year basis from January to March, extending the 5.7 per cent expansion in the previous quarter, the Ministry of Trade and Industry (MTI) said on Monday (May 25).
“Nonetheless, downside risks to Singapore’s economic outlook have risen significantly and MTI will continue to monitor developments closely and adjust the gross domestic product (GDP) growth forecast over the course of the year if necessary,” said the ministry.
This represented a 1 per cent growth on a quarter-on-quarter basis, slowing from the 1.3 per cent growth in the previous quarter.
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The growth is driven by strong performance of the wholesale trade, manufacturing and finance, and insurance sectors.
“In particular, robust artificial intelligence-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,” said the ministry.
Meanwhile, growth in the finance and insurance sector was broad-based, with steady performance in the banking, fund management and security dealing segments.
On the other hand, the higher prices of and shortages in crude oil and its derivatives arising from the Iran war contributed to contractions in the fuels and chemicals segment of the wholesale trade sector and the chemicals cluster of the manufacturing sector, the ministry said in its latest economic survey.
In February, MTI upgraded Singapore’s growth forecast for 2026 to 2 to 4 per cent from 1 to 3 per cent as it had expected strong growth momentum in the fourth quarter of 2025 “due in large part to the AI investment boom would be sustained into 2026”.
At the time, global financial conditions were expected to support global growth, but since then the global economic outlook has deteriorated with the onset of the conflict.
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, said the ministry.
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The economy grew by 6 per cent on a year-on-year basis from January to March, extending the 5.7 per cent expansion in the previous quarter, the Ministry of Trade and Industry (MTI) said on Monday (May 25).
“Nonetheless, downside risks to Singapore’s economic outlook have risen significantly and MTI will continue to monitor developments closely and adjust the gross domestic product (GDP) growth forecast over the course of the year if necessary,” said the ministry.
This represented a 1 per cent growth on a quarter-on-quarter basis, slowing from the 1.3 per cent growth in the previous quarter.
CNA Games
Show More Show Less
The growth is driven by strong performance of the wholesale trade, manufacturing and finance, and insurance sectors.
“In particular, robust artificial intelligence-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,” said the ministry.
Meanwhile, growth in the finance and insurance sector was broad-based, with steady performance in the banking, fund management and security dealing segments.
On the other hand, the higher prices of and shortages in crude oil and its derivatives arising from the Iran war contributed to contractions in the fuels and chemicals segment of the wholesale trade sector and the chemicals cluster of the manufacturing sector, the ministry said in its latest economic survey.
In February, MTI upgraded Singapore’s growth forecast for 2026 to 2 to 4 per cent from 1 to 3 per cent as it had expected strong growth momentum in the fourth quarter of 2025 “due in large part to the AI investment boom would be sustained into 2026”.
At the time, global financial conditions were expected to support global growth, but since then the global economic outlook has deteriorated with the onset of the conflict.
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, said the ministry.
Continue reading...