GROWTH CONCERNS

MAS also said higher inflation will crimp final demand in the coming months, and Singapore’s major trading partners are expected to see weaker growth.

“The situation in the Middle East is evolving and remains highly uncertain. GDP growth in 2026 as a whole is likely to step down from the above-trend pace of growth recorded in 2025,” said MAS.

Singapore’s economy grew 4.6 per cent in the first quarter, down from 5.7 per cent in the fourth quarter of last year, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Tuesday.

On a quarter-on-quarter seasonally adjusted basis, the economy contracted 0.3 per cent. MTI warned that the Middle East conflict may weigh on economic activity in the coming quarters.

Accumulated energy supply shortfalls and higher input costs will weigh on the outlook for the Singapore economy, said MAS.

But economic activity in some advanced markets should remain resilient, with global artificial intelligence-related investment expected to continue for now, the central bank said.

Domestically, a steady pipeline of public infrastructure and housing investment will also support growth. 

MAS said there are considerable risks to the outlook for both inflation and growth. For example, a more persistent disruption to energy supplies will worsen inflationary pressures worldwide and deepen the drag on growth. Industrial production may also be curtailed if key intermediate inputs are not available.

A tightening in global financial conditions or an unexpected pullback in AI-related investment would also compound downside risks to growth.

An update to the GDP forecast of 2 to 4 per cent will be given in May.