Singapore lifts 2026 GDP forecast to 4.5%-5.5% after Q2 grows 5.9%

Singapore raised its 2026 GDP growth forecast to 4.5%-5.5% from 2.0%-4.0%, while confirming that the economy expanded 5.9% year over year in the second quarter. The Ministry of Trade and Industry, or MTI, tied the upgrade to stronger-than-expected first-half performance and an improved outlook for global AI-related capital expenditure. Growth for the first half reached 6.1%, according to the ministry's August 11 release.

Forecast range moves 2 percentage points higher

The new range lifts both ends of the official forecast by 2 percentage points. Q2 growth eased from 6.3% in Q1 but exceeded the momentum implied by the previous full-year range. On a seasonally adjusted quarter-over-quarter basis, GDP rose 1.4%, following 1.2% growth in the first quarter.

Manufacturing, wholesale trade, and finance and insurance led the year-over-year expansion. MTI said global AI demand supported electronics and precision engineering, while machinery, equipment, and supplies strengthened wholesale trade. Banking benefited from credit growth and fee-generating activity. Food and beverage services contracted as outbound travel increased and visitor arrivals declined.

AI investment offsets energy and tariff pressure

MTI said the global AI investment boom had been stronger than expected since its May assessment. The ministry expects additional capital expenditure to support economies connected to the technology supply chain, including demand for networking and memory semiconductors and equipment used in capacity expansion.

The upgrade does not remove the main downside risks. MTI said the Strait of Hormuz blockade continues to disrupt energy and intermediate-input supplies, although inventory drawdowns and substitution have limited the rise in energy prices. Elevated fuel and input costs are still expected to pressure global inflation and activity during the second half. Additional U.S. tariff measures and a sudden risk-off move in markets tied to AI capital spending were also identified as risks.

What markets will watch

The revised range makes Singapore a direct read-through for the regional AI hardware cycle. Investors will watch whether electronics exports and semiconductor-equipment demand can sustain first-half growth, and whether weakness in chemicals, transportation, accommodation, retail, and food services broadens. Subsequent GDP releases will show whether the 5.9% Q2 pace is consistent with the 4.5%-5.5% full-year range as energy costs and tariffs feed through.

Not investment advice. Verify all figures with primary sources before acting.