SINGAPORE: Singapore has upgraded its gross domestic product (GDP) growth forecast for 2026 to between two and four per cent from the previous targets of one to three per cent, said its Ministry of Trade and Industry (MTI).
Today, the ministry announced that Singapore’s economy expanded by 5.0 per cent in 2025, after registering a 6.9 per cent year on-year increase in the fourth quarter (4Q) of 2025, driven by the manufacturing, wholesale trade and finance and insurance sectors.
The stronger-than-expected growth momentum seen in the last quarter of 2025 is projected to carry into 2026, it said.
"Apart from the artificial intelligence (AI) investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in several economies such as the United States (US), Germany and Japan, as well as accommodative global financial conditions, should also support global growth in the quarters ahead," it said.
The ministry also noted that global trade activity remained resilient despite the US tariffs, likely reflecting effective US tariff rates that were lower than the announced headline rates, trade diversion facilitated by supply chain adjustments, and robust AI-related exports.
It said the global economic outlook is subject to both upside and downside risks -- a stronger-than-projected upswing in the AI investment cycle could provide a greater boost to electronics demand and drive further gains in equity markets.
"On the other hand, a renewed escalation in tariff actions or flare-ups in geopolitical tensions could lead to a resurgence in economic uncertainty, which would weigh on the sentiments of businesses and households.
"Furthermore, an escalation in risk-off sentiments or a sudden pullback in global AI-related capital spending could trigger sharp corrections in global financial markets, with potential spillovers to broader economic activity," it added. - Bernama
