GDP seen hitting 4.6% as AI drives NODX higher: Nomura

The outlook tops official 2–4% estimates.

Singapore’s economic growth is expected to outpace the government’s forecast, as artificial intelligence (AI) related demand continues to lift electronics exports and manufacturing, analysts said.

Japanese investment bank Nomura maintained its 2026 GDP growth forecast at 4.6%, above the Ministry of Trade and Industry’s 2% to 4% range, after non-oil domestic exports (NODX) rose 38.4% year-on-year in May.

It added that export strength should boost manufacturing output and spill over into the services sector.

NODX growth accelerated from 24.4% in April and beat market expectations of 30.5%. Electronics exports were the main driver, rising 94.8% from 66.7% in the previous month.

“The rise appears to be even more broad-based, driven not only by sustained strength in integrated circuits (80.9%), but also disk media products (227.8%), PCs (140.9%) and disk drives (189.1%),” Nomura said.

Non-electronics exports also strengthened. Pharmaceutical exports rose 102.6% in May, contributing to the stronger-than-expected export performance.

The bank added that even excluding pharmaceuticals and non-monetary gold, NODX growth accelerated to 31.2% from 20.3%, indicating that external demand remained strong despite the Iran conflict.

However, a separate RHB report said export strength will depend on continued demand and broader global trade conditions.

The bank also flagged risks from geopolitical tensions in the Middle East and possible US tariffs.

“Beyond geopolitical risks, we remain cautious about a potential AI-driven market correction,” it said. “Though current evidence such as GSADF indicators for KOSPI and elevated Nasdaq AI-related valuations suggests exuberance rather than a confirmed bubble.”

Still, it held its full-year export growth forecast at 7.5%, citing strong AI-related demand. “We see further potential upside bias for NODX on the back of stronger year-to-date print at 18.1% and robust growth in electronics sector.”

RHB also maintained its GDP growth forecast at 4% and industrial production growth forecast at 7.0%.

By market, exports increased to Taiwan (135.2%), the US (80.9%), South Korea (67.2%), Thailand (43.4%), China (31%), the European Union (41.4%), Hong Kong (39.5%), and Malaysia (12.4%). Exports to Indonesia fell 26.9%.

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