SINGAPORE: Singapore’s economy is expected to remain resilient in the near term, driven by firm demand in tech-related sectors and continued growth in construction and financial services.
The Monetary Authority of Singapore (MAS) said in its latest quarterly macroeconomic review on Thursday (Jan 29) that a sustained upcycle in artificial intelligence-driven information technology is supporting economic momentum.
An AI investment boom in the United States has boosted high-tech production and export activity in economies linked to the electronics supply chain, like Singapore, the central bank said.
Given this global tailwind, tech manufacturing and wholesale trade of electronics and IT equipment are expected to continue outperforming.
Non-tech industries such as construction and financial services are also likely to post firm growth, aided by lending activity and a continuous pipeline of public and private projects. The output gap is projected to stay positive in 2026, though narrower than the year before.
Gross domestic product growth is expected to moderate from 2025, when the economy grew by 4.8 per cent, MAS said.
Globally, growth is expected to ease modestly in 2026, with trade policy uncertainty receding for now and international monetary and fiscal policies likely to remain supportive.
In his New Year message, Prime Minister Lawrence Wong said Singapore’s 2025 economic growth was better than expected, given fractured trade and geopolitical tensions.
He had warned, however, that “sustaining this pace of growth will be challenging”, and that Singapore cannot do “more of the same” to remain competitive.
GLOBAL AI BOOM
The sustainability of the global AI boom will be a key factor determining Singapore’s GDP growth in 2026, MAS said.
While the country does not produce graphics processing units or high-bandwidth memory chips used in AI workloads, it is integrated into the upstream AI ecosystem.
For instance, Singapore produces memory chips for storing datasets for AI models, and other servers, components and networking equipment that support AI workloads.
MAS said Singapore is poised to “deepen its linkages” in the AI global value chain. It cited American memory chip maker Micron Technology, which recently broke ground on an advanced wafer fabrication facility.
More broadly, technology-related segments such as electronics, machinery and systems manufacturing could contribute a greater share to GDP growth this year.
For example, Singapore produces semiconductors essential for electric vehicles and industrial systems. This could receive a boost as electrification and autonomous vehicles have trended globally.
At the same time, global technology companies have announced investment plans for data centres and R&D facilities in ASEAN to accelerate AI adoption, which should benefit the IT and information services segment, MAS said.