Singapore on Tuesday upgraded its economic growth forecast for this year thanks to a boom in demand for AI-related products and as global trade ‘remained resilient’ in the fact of US President Donald Trump’s tariff campaign.

Singapore uplifted its economic growth scale for the year on Tuesday, due to the excessive boom in AI-related products as global trade tensions escalate following tariffs imposed by US President Doanld Trump.  

The trade Ministry informed that the domestic growth is expected to expand from 2-4 per cent in 2026, with the previous forecast recorded as 1-3 per cent.  

The announcement has come after the growth percentage increased at about 5 per cent last year to a strong October-December, which helped it to be on top, estimating 4.8 per cent.  

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“The global economy has outperformed expectations, with most major economies turning in stronger-than-expected growth in the fourth quarter of 2025,” the ministry said, adding that the strong performance in the fourth quarter was likely to carry into this year.

“Notably, global trade activity remained resilient despite the US tariffs, likely reflecting effective US tariff rates that were lower than the announced headline rates.”

Trade diversion and expansion as countries adjusted to the tariffs and “robust AI-related exports amidst the AI investment boom” helped drive the world economy, officials said, adding that investment in artificial intelligence is expected to continue this year.

Being a hub for quality electronics, Singapore has seen a significant rise in the production of semiconductors, memory chips, and server components essential for the data centres that supply the power of AI.  

“Apart from the AI investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in several economies such as the US, Germany and Japan, as well as accommodative global financial conditions, should also support global growth in the quarters ahead,” the ministry said.

The city-state’s position as a regional financial and digital hub also allows it to capture investments in AI software and infrastructure.

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However, warned that the pace of growth in most major economies this year “is still expected to ease from 2025 levels, in part due to the drag from the full-year impact of the US tariffs and rising trade barriers that would weigh on non-AI-related global trade”.

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