Singapore Raises 2026 GDP Growth Forecast to 4.5-5.5 Per Cent as AI Boom Lifts Manufacturing and Exports
Singapore Economy | August 12, 2026
Singapore has sharply raised its full-year 2026 GDP growth forecast to 4.5 to 5.5 per cent, up from the earlier 2 to 4 per cent range, on the back of a stronger-than-expected first half powered by AI-related capital spending and a manufacturing surge. The economy grew 5.9 per cent year on year in the second quarter, beating the advance estimate of 5.7 per cent.
Revised 2026 Forecast
Q2 2026 YoY Growth
Manufacturing Output Growth
H1 2026 YoY Expansion
AI-Driven Manufacturing Powers Record First Half
The economy expanded 6.1 per cent year on year in the first half of 2026, with growth in the second quarter coming in at 5.9 per cent, easing slightly from the 6.3 per cent pace in Q1. On a quarter-on-quarter seasonally adjusted basis, the economy grew 1.4 per cent in Q2, extending the 1.2 per cent expansion in the first three months.
Manufacturing output surged 12.5 per cent year on year in Q2, extending the first quarter’s 7.3 per cent growth. The sector was driven largely by expansion in the electronics and precision engineering clusters on the back of robust global demand for AI-related semiconductors, including networking and memory chips.
Beh Swan Gin, permanent secretary at the Ministry of Trade and Industry, said at a briefing on August 11 that the global AI intelligence investment boom has been stronger than expected, providing significant tailwinds for AI-related production and exports globally.
Banks Raise Forecasts Above MTI’s Upgraded Range
At least five banks and research houses raised their own 2026 growth forecasts for Singapore after MTI’s revision, citing the stronger-than-expected H1 performance and an improved outlook for AI-linked capital spending in H2.
DBS senior economist Chua Han Teng raised his forecast to 5 per cent from 4.3 per cent, on the back of a strong H1 and “the likely persistence of the global AI boom”. UOB associate economist Jester Koh nudged his forecast to 5 per cent from 4.8 per cent. Maybank economists Chua Hak Bin and Brian Lee lifted theirs to 5.2 per cent from 4.8 per cent, and raised their 2027 growth forecast to 3.3 per cent from 3.1 per cent.
Nomura economists Euben Paracuelles and Chen Yiru were the most bullish, raising their forecast to 5.7 per cent from 4.6 per cent. RHB was the only outlier, keeping its forecast unchanged at 4.5 per cent.
Risks Remain: Tariffs, Middle East, and Sector Concentration
Despite the upgraded outlook, economists flagged several downside risks. The US 12.5 per cent tariff on Singapore exports, affecting about a third of shipments worth about S$9.4 billion annually, remains a concern. Middle East tensions and lower global oil inventories are expected to keep energy and input prices elevated in H2.
RHB’s group chief economist Barnabas Gan noted that growth was heavily driven by manufacturing rather than being broad-based, and warned of the risk of a “sharper-than-expected correction in AI-related investment” that could weaken global demand for semiconductors.
On inflation, core inflation is expected to stay between 1.5 and 2.5 per cent for now. The government has disbursed S$500 in CDC vouchers to every Singaporean household in June, with another S$300 to follow in January 2027, as part of the overall S$900 million support package to help manage cost increases from tariffs and Middle East disruptions.
Frequently Asked Questions
Why did Singapore raise its GDP growth forecast?
The economy grew 5.9 per cent year on year in Q2 and 6.1 per cent in the first half of 2026, well above earlier expectations. This was driven largely by AI-related capital spending flowing into manufacturing, electronics, and precision engineering sectors.
How much did manufacturing grow in Q2 2026?
Manufacturing output surged 12.5 per cent year on year in the second quarter, extending the first quarter’s 7.3 per cent growth. The expansion was driven by electronics and precision engineering clusters serving robust global demand for AI-related semiconductors.
Which banks raised their Singapore growth forecasts?
DBS raised its forecast to 5 per cent, UOB to 5 per cent, Maybank to 5.2 per cent, and Nomura to 5.7 per cent. RHB was the only outlier, keeping its forecast at 4.5 per cent at the lower end of the official range.
What are the key risks to the growth outlook?
Key risks include the US 12.5 per cent tariff on Singapore exports worth about S$9.4 billion annually, Middle East tensions keeping energy prices elevated, and the possibility of a sharper-than-expected correction in AI-related investment.
What support is the government providing amid tariff pressures?
The government has disbursed S$500 in CDC vouchers to every Singaporean household in June, with another S$300 to follow in January 2027, as part of the overall S$900 million support package.
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