Singapore on Monday maintained its 2026 economic growth forecast at 2 per cent to 4 per cent, citing stronger-than-expected first-quarter performance supported by rising artificial intelligence (AI)-related demand, even as tensions in the Middle East continue to pose risks to the global economy.

According to Singapore’s Ministry of Trade and Industry (MTI), the country’s economy expanded by 6 per cent year-on-year in the first quarter of 2026, following a 5.7 per cent growth recorded in the previous quarter.

AI Demand Supports Economic Growth

The MTI said strong performances in wholesale trade, manufacturing, and finance and insurance sectors helped boost economic growth. The ministry added that robust AI-related demand has continued to support Singapore’s economy and regional markets.

The ministry had earlier raised its 2026 growth forecast from 1–3 per cent to 2–4 per cent in February, expecting the AI investment boom and supportive fiscal policies in major economies to sustain momentum.

Middle East Conflict Raises Concerns

Despite the positive growth outlook, the ministry warned that the ongoing US-Israel-Iran conflict has weakened the global economic environment. Rising crude oil prices and supply shortages linked to the conflict have negatively impacted Singapore’s fuels, chemicals, and manufacturing sectors.

Earlier this month, the International Monetary Fund (IMF) projected Singapore’s economic growth would slow to 3.5 per cent in 2026 and 2.7 per cent in 2027 due to pressure on energy prices and global supply chains caused by the Middle East crisis.