Economists raise Singapore’s 2026 growth forecast to 5% on AI boom: MAS survey

SINGAPORE – Private-sector economists have bumped up their 2026 growth forecast for Singapore’s economy to 5 per cent, up from 3.5 per cent, following a surprise surge in exports and manufacturing output in the first half of the year.

Released on Sept 2, the latest Monetary Authority of Singapore (MAS) quarterly survey of professional forecasters follows the Ministry of Trade and Industry’s Aug 11 upgrade of its gross domestic product (GDP) growth forecast to between 4.5 per cent and 5.5 per cent, up from 2 per cent to 4 per cent, amid the global AI boom.

Enterprise Singapore also on Aug 11 upgraded its non-oil domestic exports (NODX) forecast for 2026 to a range of 14 per cent to 16 per cent, up from an earlier forecast of 3 per cent to 5 per cent, reflecting the exceptionally strong first-half performance led by electronics.

Singapore’s economy grew by 5.9 per cent year on year in the second quarter of 2026, following a 6.3 per cent expansion in the first quarter. 

The respondents in MAS’ latest survey raised their prediction for manufacturing to 8.4 per cent on the back of a 17 per cent surge in Singapore’s NODX amid the strong demand for AI-related electronic hardware such as semiconductors and the machines that make them.

This is a big jump from their June forecast of 5 per cent for manufacturing and 6.1 per cent for NODX.

All economists in the survey identified a sustained AI-driven upturn in the technology cycle as a key support to Singapore’s economic outlook, which could lift GDP growth even higher.

They highlighted that a de-escalation or resolution of the Middle East conflict and stronger-than-expected global growth could deliver possible upside for the economy.

However, the survey also cited downside risks to Singapore’s economic outlook if the now six-month-old Iran war escalates or turns into a more prolonged conflict.

The survey also pointed out Singapore’s vulnerability to a potential burst in the AI bubble and the resulting spillover into financial markets.

The respondents raised their growth forecasts for several sectors: finance and insurance to 5.4 per cent (from 4.5 per cent); construction to 7.1 per cent (from 6.5 per cent); and wholesale and retail trade to 7.4 per cent (from 4.9 per cent).

However, the projection for the accommodation and food services sector was lowered to 1 per cent from the June forecast of 1.8 per cent.

The economists also saw a slightly better inflation outcome.

The latest survey’s median forecast for all-items inflation for 2026 came in at 2.1 per cent, lower than the 2.3 per cent in June.

The median forecast for core inflation – which excludes private transport and accommodation costs to better represent household expenses – was also lowered to 1.9 per cent from 2 per cent.

On the outlook for the labour market, respondents expect the overall unemployment rate to remain at 2.1 per cent at year-end, unchanged from the June 2026 survey.

On monetary policy, 45 per cent of the respondents expected MAS to tighten – seeking a stronger trade-weighted Singapore dollar – in October by increasing the slope of the Singapore dollar nominal effective exchange rate policy band.

This is higher than the 30 per cent who expected the same move in the previous survey.