SINGAPORE, Singapore — Singapore has upgraded its economic growth forecast for 2026, citing a surge in demand for artificial intelligence-related products and unexpectedly resilient global trade despite United States tariff pressures.
In a statement on Tuesday, the Ministry of Trade and Industry said the city-state’s gross domestic product is now expected to expand by 2.0–4.0pc in 2026, up from an earlier projection of 1.0–3.0pc.
The revised outlook follows stronger-than-expected performance in 2025, when the economy grew by 5.0pc, exceeding the initial estimate of 4.8pc after a robust final quarter.
“The global economy has outperformed expectations, with most major economies recording stronger-than-expected growth in the fourth quarter of 2025,” the ministry said.
It added that the momentum from the last quarter of 2025 is likely to carry into this year.
Trade Resilience Despite Tariffs
Singapore’s trade-dependent economy has so far weathered the impact of US tariffs introduced under President Donald Trump’s renewed protectionist push.
“Global trade activity remained resilient despite the US tariffs,” the ministry said, noting that effective tariff rates were lower than initially announced.
Officials attributed the resilience to trade diversion, as countries adjusted supply chains, and to strong demand for AI-related exports.
The ministry said the global economy was being supported by “robust AI-related exports amidst the AI investment boom,” a trend expected to continue through 2026.
AI Manufacturing Boost
As a major hub for high-end electronics manufacturing, Singapore has benefited directly from increased global demand for AI infrastructure.
Production of semiconductors, memory chips, and server components has risen sharply, driven by the rapid expansion of data centres worldwide.
The city-state’s role as a regional financial and digital hub has also enabled it to attract investment into AI software development and supporting infrastructure.
Global Policy Support
Beyond AI, the ministry pointed to supportive macroeconomic conditions in major economies.
“Apart from the AI investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in economies such as the US, Germany, and Japan, as well as accommodative global financial conditions, should support global growth,” the ministry said.
These policies are expected to underpin demand across multiple sectors in the near term.
Risks Remain
However, officials cautioned that growth in major economies is still expected to slow compared to 2025.
The ministry warned that the full-year impact of US tariffs and rising global trade barriers could weigh on non-AI-related trade.
“The pace of growth in most major economies is expected to ease in 2026,” it said.
Singapore remains highly exposed to external shocks due to its reliance on international trade, finance, and manufacturing exports.
Any sharp slowdown in global demand or escalation of trade tensions could quickly affect the city-state’s outlook.
