Singapore’s economy in 2026 is viewed more positively by international financial institutions, driven by strong investment in artificial intelligence (AI), a construction boom, and safe-haven capital inflows.

Maybank Investment Bank has raised its 2026 GDP growth forecast for Singapore, the world's second-richest country by GDP per capita in 2025 after Switzerland, to 4.2%, up from 3.4% previously and above the government’s official range of 2-4%. It also revised its 2027 forecast upward to 3.1%.

According to Maybank, the economy is supported by robust capital spending on AI by major tech firms, a surge in construction activity, and asset-preservation flows from the Middle East. While the Middle East conflict is severely affecting some energy-intensive industries, particularly petrochemicals, Maybank said the impact on other sectors is being cushioned by demand diversion from the Gulf region, benefiting industries such as marine shipping and aviation.

The bank added that AI continues to boost the production and export of memory chips and server-related products, supporting manufacturing and wholesale trade.

People relax on an outdoor deck as the sun sets in Marina Bay in Singapore on Monday, 14 June, 2021. Photo by Reuters

UOB Global Economics & Markets Research has also upgraded its 2026 GDP growth forecast from 2.5% to 3.2%, citing a recovery in the electronics sector and strong regional semiconductor export data. Meanwhile, RHB Investment Bank has maintained its forecast at 3% but highlighted two-sided risks stemming from geopolitical uncertainties and U.S. tariff policies.

Singapore’s Ministry of Trade and Industry (MTI) has kept its 2026 growth outlook unchanged at 2-4%, warning that downside risks could increase if tensions in the Middle East escalate further. In the first quarter of 2026, Singapore’s economy expanded by 6% year-on-year, up from 5.7% in the previous quarter.

Regarding inflation, analysts expect rising price pressures as higher energy costs linked to Middle East tensions gradually feed into the economy. Maybank projects monthly inflation could exceed 2% in the second and third quarters, with full-year headline and core inflation at around 1.8% and 1.9%, respectively. Meanwhile, RHB forecasts headline inflation at 2.5%, warning of additional pressure from food prices and supply chain disruptions.

Source: VNExpress