Singapore's upgraded economic outlook a 'bullish signal' of AI-driven expansion, but other sectors also contributing: Experts

Singapore’s upgraded GDP forecast for 2026, now ranging between 4.5% and 5.5%, signals confidence in AI-driven growth, but experts emphasize that other sectors also contribute to the economic expansion. The Ministry of Trade and Industry (MTI) credited better-than-expected performance in the first half of the year and expected acceleration in global AI-related capital expenditure.

OCBC chief economist Selena Ling noted that while AI is a major growth driver, Singapore is not overly reliant on it, and other sectors like construction, finance, and information and communications are also growing steadily. However, sectors directly affected by supply disruptions from the Middle East conflict, such as chemicals and food and beverage services, may face challenges.

Dampened consumer sentiments due to inflationary pressures could also impact these sectors. Despite the upgrade in the growth forecast, experts caution that a prolonged disruption to traffic through the Strait of Hormuz and renewed US tariff measures could pose risks to Singapore’s trade-dependent economy. The government has announced support measures, including nearly S$2 billion in support for households and businesses affected by the Middle East conflict, to mitigate the impact.