AI boom and falling rates trigger upgrades to Singapore GDP outlook

Major financial institutions have raised Singapore’s growth outlook to as much as 3.6%.

Experts expect the Singapore economy to continue its expansion, with some raising their growth projections this year, thanks to the technology boom and easing interest rates.

The Ministry of Trade and Industry (MTI) is now expecting the city-state’s economy to grow between 2% to 4% from its previous forecast of 1% to 3%. This was thanks to stronger-than-expected global economic growth in late 2025.

“We are raising our 2026 GDP [gross domestic product] growth forecast to +3.6% (from +2.8% previously). The robust growth momentum looks set to continue in early 2026, as reflected in improving PMI readings,” Maybank said in its latest analysis.

The company also said that GDP growth in the first half of 2026 is forecast to average 4% to 5%, with the AI capex boom and wider adoption supporting electronics manufacturing, trade-related activities and infocomm.

Falling interest rates, safe haven inflows and equity market rejuvenation initiatives will support capital market, wealth, lending and real estate activities. Construction will likely remain strong given the pipeline of large-scale infrastructure and public housing projects, and the strong lineup of new private condominium launches in 2025 and 2026, Maybank said.

UOB Global Economics and Markets Research also raised its GDP projections to 3.6% from 2.6%, with risks likely still tilted towards the upside after the sharp revision.

The company said the output gap is seen to remain significantly positive this year, reinforcing the base case for a 50bps S$NEER band slope steepening to 1% per annum in the April 2026 monetary policy review.

Meanwhile, RHB kept its full-year GDP projection at 3%, with growth momentum likely to stay robust, underpinned by steady external demand and healthy domestic consumption.

“Singapore’s GDP growth, which performed stronger than expected in the first half of 2025, may persist into early 2026, allowing a relatively healthier growth print on a base-year comparison,” its report read.

“Domestic demand is expected to remain resilient, supported by steady consumption, investment and government policies,” it added.

RHB said the economy is expected to remain resilient, with growth reaching 4.5% in the first half of 2026, up from 4.2% a year ago.
Its optimistic outlook for the economy is supported by improved trade dynamics, more accommodative global monetary conditions, and firm growth momentum.

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