Singapore has significantly upgraded its annual economic growth forecast, now expecting GDP growth for 2026 to be between 4.5% and 5.5%. This revision follows a stronger-than-anticipated performance in the first half of the year, along with boosts from AI-related sectors and exports. The Ministry of Trade and Industry (MTI) previously forecasted growth between 2% and 4% and had initially set estimates at 1% to 3% at the start of the year.
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The MTI noted that the economic impact of the U.S.-Iran conflict has been less severe than earlier concerns, as strategies such as the drawdown of oil inventories and the shift to alternative energy sources have limited increases in global energy prices.
In related news, Singapore reported a revised GDP growth of 5.9% for the second quarter, surpassing earlier estimates of 5.7%. The robust performance was primarily driven by advancements in manufacturing, wholesale trade, as well as the finance and insurance sectors. This strong growth could provide the Monetary Authority of Singapore (MAS) with more flexibility to address inflationary pressures.
In late July, the MAS enacted an unexpected tightening of monetary policy, citing projections of rising imported costs due to higher fuel and electronics prices, alongside potential adverse weather conditions affecting import sources. Core inflation, excluding accommodation and transportation costs, rose to 1.6% in June from 1.4% in May, remaining near the MAS's forecast range of 1.5% to 2.5%. The overall headline inflation stood at 1.9%.