Singapore GDP grows 5.9% y-o-y in Q2, government raises 2026 forecast on AI boom

“Against this backdrop, the 2026 outlook for sectors of the Singapore economy that are linked to the AI-driven technology cycle has improved, although that for sectors directly affected by supply disruptions arising from the Middle East conflict remains weak,” the ministry said. On a quarter-on-quarter, seasonally adjusted basis, gross domestic product expanded by 1.4% in the April-June period, compared with an advance estimate of a 1.1% growth.

In a separate statement, Enterprise Singapore upgraded its forecast for growth this year in non-oil domestic exports to 14% to 16%, from 3% to 5% previously.

“The global economy has remained more resilient than expected, bolstered by the sustained AI-related demand and capex spending,” Enterprise Singapore said, but added that downside risks included the Iran war and the new round of U.S. tariffs.

The Monetary Authority of Singapore has said it expects growth to stay firm for the rest of 2026, although it has flagged the sustainability of the AI investment boom as a major risk. The central bank unexpectedly tightened monetary policy in late July, citing persistent inflationary risks as the Middle East conflict keeps energy cost pressures elevated. Also last month, the government announced a S$900 million support package to help households and businesses cope with high energy prices, on top of the almost S$1 billion announced in April.

In April, the central bank raised both its core and headline inflation forecasts for 2026 to a range of 1.5% to 2.5%, from 1.0% to 2.0% previously. Annual inflation was 1.6% in June, and the central bank expects it to pick up and stay elevated for the first half of next year. July inflation data will be released later this month. – Reuters