World’s second richest country records higher-than-estimated Q2 GDP growth at 5.9%, raises full-year forecast

Singapore, the world's second richest country, has reported impressive economic growth, with the government now forecasting a higher-than-estimated GDP growth rate for the second quarter of 2026. The Ministry of Trade and Industry expressed optimism, citing the less severe impact of the Iran war and the unexpected surge in global AI investment.

The trade ministry revised its annual growth forecast from 2.0%-4.0% to the more ambitious 4.5%-5.5%. This optimism is buoyed by the improved outlook of AI-driven sectors and a robust construction sector, despite supply disruptions from the Middle East conflict.

Maybank economist Chua Hak Bin concurred, predicting that ongoing factors like AI booms, safe-haven capital inflows, and a construction surge could maintain the strong momentum into the latter half of the year. The government's initial GDP growth for the first half of the year stood at 6.1%, with a quarter-on-quarter increase of 1.4% in the April-June period.

Enterprise Singapore also upgraded its forecast for non-oil domestic exports growth to 14%-16% this year, up from the previous range of 3%-5%. The Monetary Authority of Singapore, however, cautioned about the risks associated with the AI investment boom's sustainability. The central bank had already raised inflation forecasts for 2026, citing persistent inflationary pressures from the war's energy cost impacts.

The government has introduced a S$900 million support package to aid households and businesses grappling with high energy prices, following the central bank's July interest rate hike to combat inflation.