SINGAPORE: Private-sector economists expect Singapore’s economy to expand by 3.5% in 2026, just a tad weaker than their previous forecast of 3.6%, on slower growth in private consumption – a measure of spending by households on goods and services.
The latest quarterly survey of professional forecasters was sent out by the Monetary Authority of Singapore (MAS) on May 25, well before the United States and Iran agreed on June 14 on a 60-day ceasefire deal that is likely to normalise oil and natural gas flows from the Middle East.
In response to the ceasefire deal and amid hopes that shipments through the Strait of Hormuz would continue to increase in the coming weeks, crude oil and natural gas prices have dropped significantly and will likely ease further.
Survey respondents, who feared further escalation in the Middle East conflict before the US-Iran deal, also saw inflation in Singapore edging up, which may have led them to believe households would cut spending.
The forecast in MAS’ latest survey, down from 3.6% in March’s survey, still sits at the higher end of the Trade and Industry Ministry’s 2% to 4% gross domestic product (GDP) growth estimate.
The Singapore economy expanded by 6% year-on-year in the first quarter of 2026, slightly exceeding the median forecast of 5.8% in the previous survey.
In the current survey, respondents expect the economy to grow by 4.3% in the second quarter.
On the outlook for the rest of 2026, respondents were unanimous on a possible upside for the economy from a sustained artificial intelligence-led tech cycle upturn.
While they lowered their projection for private consumption to 3.2% from 3.5%, the impact on overall GDP growth was mitigated by higher growth forecasts for almost all other sectors of the economy.
The estimate for manufacturing was up at 5% from 4.3%, and the finance and insurance sector was expected to grow at 4.5%, up from 3.6%.
Growth in construction was predicted at 6.5%, up from 5%. The forecast for wholesale and retail trade was higher at 4.9%, from 4%, and accommodation and food services were expected to expand by 1.8%, up from 1.3% predicted in March.
For 2027, the growth rate forecast stood unchanged at 2.5%.
The median forecast in the June survey for 2026 all-items inflation came in at 2.3%, higher than the 1.5% in the March survey.
The median forecast for core inflation – which excludes private transport and accommodation costs to better represent household expenses – was also up at 2%, from 1.5% in the previous survey.
On the labour market front, respondents expect the overall unemployment rate – which includes non-residents – to remain at 2.1% at the end of 2026, unchanged from the March survey.
On monetary policy, 38% of respondents anticipate that the MAS will further tighten its stance to seek a stronger trade-weighted Singapore dollar. The central bank will deliver its next monetary policy review in July. — The Straits Times/ANN
