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Singapore has sharply upgraded its economic growth forecast for 2026, citing stronger-than-expected activity and a surge in global demand related to artificial intelligence (AI).
The government now expects gross domestic product (GDP) to grow by 4.5 to 5.5 percent year-on-year in 2026, significantly higher than its previous forecast of 2.0 to 4.0 percent.
The Ministry of Trade and Industry (MTI) said the upward revision reflected the economy’s better-than-expected performance in the first half of the year, along with a stronger outlook for the remainder of 2026.
The ministry attributed the improved outlook largely to an acceleration in global AI-related capital expenditure, which has boosted demand across several sectors of Singapore’s economy.
Manufacturing, wholesale trade, and finance and insurance were among the key drivers of economic growth in the second quarter, according to the ministry.
Within manufacturing, strong AI-related demand supported the electronics and precision engineering clusters. The machinery, equipment and supplies segment of wholesale trade also benefited from the increased demand linked to AI investment.
The stronger performance comes as Singapore faces uncertainty from geopolitical tensions and disruptions to the global economy.
The government has said rising global investment in AI could help cushion the city-state against the economic impact of the war in the Middle East.
Officials said AI-related investment has been stronger than initially expected, while the impact of the conflict involving Iran on the broader global economy has so far been less severe than feared.
Singapore, a major global trade and financial hub, is particularly sensitive to changes in global demand and supply chains. The country’s export-oriented economy has therefore benefited from increased investment in advanced technology and AI-related infrastructure.
The latest forecast marks a significant improvement in the government’s assessment of the economy and suggests that technology-driven demand could provide an important source of growth through the remainder of the year.
However, Singapore remains exposed to global economic risks, including geopolitical tensions, trade disruptions and fluctuations in external demand. The government is therefore closely monitoring developments in international markets while assessing the longer-term impact of the AI investment boom.
