Singapore says AI-related demand lifting economy

Singapore has significantly revised its economic growth forecast for 2026, projecting a much stronger performance than previously anticipated. The government now expects annual GDP to increase by 4.5 to 5.5 percent, up from a previous estimate of 2.0 to 4.0 percent. This surge in growth is attributed to robust demand for artificial intelligence (AI) globally, which has driven capital expenditure.

The Ministry of Trade and Industry highlighted that this trend was reflected in the second quarter's strong growth, particularly in manufacturing, wholesale trade, and finance and insurance sectors. AI-related demand is boosting the electronics and precision engineering clusters of manufacturing, as well as machinery, equipment, and supplies in wholesale trade.

Despite the ongoing Iran war, Singapore's leadership believes global AI demand will shield the economy from its full impact. While AI investment has exceeded expectations, officials note the war's effect on the broader economy has been less severe than initially feared.