What will slow Singapore’s economic growth in 2026?

Construction will remain a major domestic growth driver.

Singapore’s economy is expected to grow 1.8% in 2026, easing from an estimated 4% in 2025, as global trade pressures mount, according to DBS Research 2026 Economy & Market Strategy Outlook report.

Higher U.S. tariffs, ongoing geopolitical fragmentation, rapid technological shifts, and climate-related challenges will continue to shape the global environment.

Global growth in 2026 will be weighed down by the delayed impact of U.S. tariff hikes, though technology investment, digital adoption, and supportive financial conditions will help cushion the slowdown. Risks remain tilted to the downside due to persistent tariff tensions and stretched financial markets.

Singapore’s trade-related sectors are set to face headwinds from worldwide tariff frictions and a reversal of earlier export front-loading. The electronics upcycle that began in mid-2024 is expected to normalise as the AI boom matures and potential U.S. semiconductor tariffs come into force.

Modern services such as finance, insurance, and professional services will also encounter external challenges.

However, strong AI-driven digitalisation, favourable financial conditions, and Singapore’s status as a trusted business hub will provide support.

Construction will be a key outperformer, driven by major transport infrastructure projects, hospitality expansions, and housing development.

Inflation will remain contained despite rising slightly. Core inflation is forecast at 1% and headline inflation at 1.2% in 2026.

External disinflation is expected to ease, whilst domestic green-transition measures, including a sharp increase in carbon taxes and a new sustainable fuel levy, will push energy and travel costs higher.

A 5% public transport fare increase will also be partly offset by enhanced subsidies for healthcare and education.

The Monetary Authority of Singapore is expected to keep monetary policy unchanged in 2026 to maintain flexibility amidst global uncertainty.

After two easing moves in early 2025, the central bank held its SGD NEER parameters steady in July and October, aligning policy with a narrowing output gap and gradually rising inflation.

The government will focus on bolstering economic competitiveness, with the Singapore Economic Resilience Taskforce set to release its recommendations by mid-2026.

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