SINGAPORE: Singapore's economy grew by 4.6 per cent year-on-year in the first quarter (1Q) of 2026, moderating from the 5.7 per cent growth in the previous quarter, according to advanced estimates released by the Ministry of Trade and Industry (MTI) on Tuesday.
The growth continued to be underpinned by the manufacturing and services clusters that are tied to the global artificial intelligence (AI) capital expenditure cycle.
In a statement, MTI said that on a quarter-on-quarter, seasonally-adjusted basis, the economy contracted by 0.3 per cent, a reversal from the 1.3 per cent expansion in the 4Q of 2025.
"While gross domestic product (GDP) growth remained resilient in the 1Q 2026, the United States-Israel-Iran conflict that began in end-February may weigh on economic activity in the coming quarters," it said.
Meanwhile, in a separate statement, the Monetary Authority of Singapore (MAS) has tightened its monetary policy by slightly increasing the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band.
It noted that GDP growth in the Singapore economy is expected to slow over the course of this year, while the output gap should average around zero per cent.
"Singapore's imported energy costs have already risen. Prices of a wider range of imported goods and services are expected to increase in the quarters ahead.
"Consequently, MAS core inflation will pick up and remain elevated over the next few quarters," it said.
Therefore, MAS also raised its forecast for both its core inflation and consumer price index (CPI)-all items inflation to 1.5 per cent-2.5 per cent from 1.0 per cent-2.0 per cent previously, citing risks to the outlook for inflation and growth.
"A more persistent disruption to energy supplies will exacerbate inflationary pressures worldwide, as well as deepen the drag on growth.
"Shortages of key intermediate inputs could also abruptly curtail industrial production," it noted.
MAS said a further tightening in global financial conditions or an unexpected pullback in AI-related investment could compound downside risks to growth. - Bernama
