Singapore, May 25 (IANS) Singapore maintained its 2026 economic growth forecast at 2 per cent to 4 per cent on Monday, citing stronger-than-expected first-quarter expansion driven by artificial intelligence (AI)-related demand, even as risks from the US-Israel-Iran conflict cloud the global outlook.
The Ministry of Trade and Industry (MTI) said the economy grew 6 per cent year-on-year in the first quarter, extending the 5.7 per cent expansion recorded in the previous quarter, supported by strong performances in wholesale trade, manufacturing, and finance and insurance.
Robust AI-related demand continued to underpin growth, the ministry said in a statement.
At the same time, higher prices and shortages of crude oil and related products stemming from the Middle East conflict weighed on parts of the economy, contributing to contractions in the fuels and chemicals segment of the wholesale trade sector and the chemicals cluster of the manufacturing sector.
The MTI had raised its 2026 growth forecast in February from 1 per cent to 3 per cent, to 2 per cent to 4 percent, expecting strong momentum from the fourth quarter of 2025 — fueled largely by the AI investment boom — to carry into 2026 alongside expansionary fiscal policies in major economies, Xinhua news agency reported.
Since then, however, the global economic outlook has weakened following the outbreak of the conflict, the ministry said.
Still, “AI-related demand has remained robust and should continue to support the growth of regional economies throughout the year,” the MTI added.
Earlier on May 19, the International Monetary Fund had projected Singapore’s economic growth to ease to 3.5 per cent in 2026 and 2.7 per cent in 2027, citing the impact of the Middle East conflict on energy prices and global supply chains.
“Before the war in the Middle East, growth was expected to moderate gradually from 2026 with a normalization in private investment and net exports,” the IMF had said in a statement on Monday following its 2026 Article IV Consultation with Singaporean authorities and stakeholders held from May 7 to May 18.
–IANS
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