Economists trim 2026 GDP forecast to 3.5%

Headline inflation is now seen at 2.3%, up from 1.5% in March.

Economists trimmed this year’s GDP growth forecast to 3.5% from 3.6%, whilst sharply raising inflation expectations, according to the Monetary Authority of Singapore’s (MAS) June Survey of Professional Forecasters.

The economy expanded 6% year-on-year in the first quarter, ahead of economists’ earlier forecast of 5.8%.

Growth is expected to moderate to 4.3% in the second quarter and 2.5% in 2027.

Economists raised their 2026 inflation forecasts, with headline inflation now seen at 2.3% and core inflation at 2%, both up from 1.5% in March.

The report also showed rising expectations of monetary tightening, with 38% of respondents expecting MAS to tighten policy in July by increasing the slope of the S$NEER policy band, up from 24% in the March survey.

Sector expectations were revised higher across several industries. Manufacturing growth was raised to 5% from 4.3%, finance and insurance to 4.5% from 3.6%, and construction to 6.5% from 5%.

Non-oil domestic export growth was also revised up to 6.1% from 4.5%.

About 85% of respondents identified an escalation or prolongation of the Middle East conflict as the biggest downside risk to the economy.

A potential burst of the artificial intelligence bubble or slowdown in AI-related capital expenditure was the second most cited downside risk, flagged by 60%.

On the upside, all respondents cited a sustained AI-led technology cycle as a positive risk to the economic outlook.

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