By Amanda Lee and Fabiana Negrin Ochoa
SINGAPORE–Data showing that Singapore’s economy held up much better than expected during last year’s tariff turmoil has spurred a flurry of forecast upgrades, pointing to continued resilience in 2026.
Economists now see the city-state’s economic growth at 2.8% to 3.6% this year, thanks to the artificial-intelligence boom and a better global economic outlook.
That falls within the official projection of a 2.0% to 4.0% expansion in 2026, itself an upgrade from the previous range of 1.0% to 3.0%.
Officials on Tuesday also raised Singapore’s exports forecast for 2026, after a surprisingly resilient trade performance last year.
At the height of tariff uncertainty, officials had warned about a big hit to exports and the potential flatlining of economic growth. Those worries proved to be overdone, as strong AI-related demand buoyed exports and the economy expanded by a respectable 5.0%, beating advance estimates.
That momentum is expected to carry into 2026, government agency Enterprise Singapore said. Export orders for the electronics segment remained strong, and firms expect a rise in the first quarter.
Singapore’s economy has entered the year on firm footing, DBS’s Chua Han Teng said. Recent data point to resilience near term, he said as the bank raised its growth view for 2026.
OCBC, Maybank and UOB have also lifted their projections for the small, open economy.
The AI investment boom should keep providing a tailwind for Singapore manufacturers, spilling over into other sectors too, Maybank economists said.
That said, it is worth noting that even the most optimistic forecast still sees a slowdown ahead, despite the strong finish to 2025.
Officials warn that risks continue to loom on the horizon, most notably from potential U.S. tariffs on key sectors like semiconductors and pharmaceuticals, and from a correction in AI spending.
Singapore’s small, open economy makes it vulnerable to trade shocks, including potential levies on two of its key exports — pharmaceuticals and electronics.
In September, Deputy Prime Minister Gan Kim Yong said that the U.S. tariff on pharmaceuticals is of “significant concern” to Singapore, as it exports billions of dollars of the products to the U.S.
Trump had announced last year that the U.S. will impose a 100% tariff on branded or patented pharmaceutical products from companies that aren’t building a manufacturing plant in America.
For OCBC chief economist Selena Ling, the city-state’s outlook appears brighter given that the AI-related investment boom continues apace, notwithstanding the recent volatility over stock valuations and capex, especially in software spending.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
02-10-26 0251ET