Singapore Q1 GDP Beats Forecasts

Singapore’s economy posted a stronger-than-expected start to 2026, with gross domestic product expanding 6.0% year-on-year in the first quarter, covering January to March. On a quarter-on-quarter, seasonally adjusted basis, GDP rose 1.0%, according to the Ministry of Trade and Industry (MTI).

MTI said the 6.0% year-on-year print outpaced its earlier April estimate of 4.6% for the quarter, indicating firmer underlying momentum than previously assessed. Despite the upside surprise, the ministry opted not to change its full-year view at this stage.

Following the Q1 data, MTI maintained its forecast for Singapore’s 2026 GDP growth at 2–4%. The ministry said it would continue to monitor economic developments and indicated that the projection could be adjusted later in the year if conditions change.

Keeping the forecast unchanged suggests policymakers are balancing the strong first-quarter performance against mounting external risks, particularly those related to geopolitical tensions and global demand.

MTI highlighted wholesale trade, manufacturing, and the finance and insurance sectors as the main contributors to Singapore’s first-quarter expansion. These sectors collectively underpinned the better-than-expected GDP outcome.

Within manufacturing, MTI pointed to strength in the electronics and precision engineering clusters. In wholesale trade, the machinery, equipment and supplies segment was a notable beneficiary of ongoing investment trends.

The ministry attributed a key part of the growth momentum to sustained AI-related capital spending. It said demand linked to artificial intelligence has supported the electronics and precision engineering clusters within manufacturing.

AI demand has also bolstered the machinery, equipment and supplies segment of wholesale trade, indicating that technology-related investment is feeding through multiple parts of the economy and helping offset external headwinds.

Despite the strong first-quarter results, MTI cautioned that downside risks have "risen significantly" following the outbreak of the Middle East conflict, which it referenced as the Iran war. The ministry highlighted the potential for disruptions to the supply of energy and other key inputs.

MTI warned that such disruptions are putting upward pressure on input prices and broader inflationary pressures. These developments, it said, could weaken external demand and slow global growth, with possible implications for Singapore’s open and trade-dependent economy.

Given the combination of robust AI-driven activity and elevated geopolitical risks, MTI emphasised that it will continue to monitor global and regional developments closely. The ministry signalled readiness to reassess the growth outlook if necessary.

This approach reflects an effort to recognise Singapore’s current growth support from technology-related investment while acknowledging that higher energy costs and weaker global demand could weigh on the outlook later in 2026.