Singapore – Singapore has raised its economic growth forecast for 2026, citing booming demand for artificial intelligence (AI)-related products and resilient global trade despite the impact of US tariffs.
The Ministry of Trade and Industry announced Tuesday that gross domestic product (GDP) is now expected to expand between 2.0% and 4.0%, up from the previous forecast of 1.0% to 3.0%.
The revision follows stronger-than-expected growth in 2025, when GDP rose 5.0%, surpassing the earlier estimate of 4.8% thanks to a robust fourth quarter.
Drivers of Growth
Officials highlighted several key factors behind the upgrade:
- AI Investment Boom: Robust exports of semiconductors, memory chips, and server components essential for AI data centres have boosted Singapore’s manufacturing sector.
- Resilient Global Trade: Despite US tariffs, trade diversion and lower effective tariff rates helped sustain global commerce.
- Financial and Digital Hub Advantage: Singapore’s role as a regional hub has attracted investments in AI software and infrastructure.
- Supportive Global Conditions: Expansionary fiscal policies in the US, Germany, and Japan, alongside accommodative financial conditions, are expected to support growth.
“Apart from the AI investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in several economies… should also support global growth in the quarters ahead,” the ministry said.
Risks Ahead
While optimistic, the ministry cautioned that growth in major economies is expected to ease compared to 2025. The full-year impact of US tariffs and rising trade barriers could weigh on non-AI-related global trade, posing risks for Singapore’s highly trade-dependent economy.
Conclusion
Singapore’s upgraded forecast underscores the transformative impact of AI on global trade and manufacturing. Yet, as a nation heavily reliant on international commerce, it remains vulnerable to geopolitical tensions and protectionist policies.
