Singapore upgrades 2026 GDP growth forecast to 4.5%-5.5%

Singapore on Tuesday sharply lifted its annual economic growth forecast, citing a stronger-than-expected performance in the first half and boost from AI-related sectors and exports.

The Ministry of Trade and Industry said GDP growth for 2026 is now expected to come in at 4.5% to 5.5%, more than double the lower end of its previous forecast of 2%-4%.

MTI added that that the economic impact of the U.S-Iran conflict has also been less severe than initially feared, pointing out that the drawdown of oil inventories and substitution to alternative energy sources have capped the rise in global energy prices.

Singapore has upgraded its growth estimates for a second time this year. At the start of the year, MTI had estimated growth at 1%-3%.

The announcement comes as Singapore reported revised growth numbers for the second quarter, with the city-state's economy expanding 5.9%, compared with 5.7% in advance estimates.

The performance in the second quarter was mainly driven by the manufacturing, wholesale trade, as well as the finance and insurance sector, MTI said.

The strong performance is likely to offer some room for the Monetary Authority of Singapore to act against inflation. The MAS had tightened its monetary policy in late July in an unexpected move.

At the time, the central bank said that Singapore's imported costs are likely to rise in the quarters ahead, due to higher fuel and electronic input costs, while also factoring in adverse weather conditions in Singapore's import sources.

Singapore's core inflation, which excludes accommodation and transportation costs, rose to 1.6% in June from 1.4% in May, near the bottom of the MAS' 1.5%–2.5% forecast range for this year, with headline inflation at 1.9%.