Singapore's economy beats expectations as gov't warns of Iran war fallout

Singapore’s GDP expanded 6% year-on-year in the first quarter, exceeding an advance estimate of 4.6%. On a seasonally adjusted basis, GDP grew 1% from the previous quarter. Growth was supported by wholesale trade, manufacturing, and finance and insurance. Strong AI-related demand boosted machinery, equipment and supplies within wholesale trade, and strengthened electronics and precision engineering within manufacturing. The 2026 growth outlook remains 2% to 4% despite risks from higher energy and fertiliser prices. Closure of the Strait of Hormuz to most shipping is expected to weigh on global economic activity. AI demand is expected to remain robust and support regional growth through the year.

"Singapore's gross domestic product (GDP) expanded 6 percent year-on-year in the first quarter, the Ministry of Trade and Industry said on Monday, comfortably beating an official advance estimate of 4.6 percent. On a seasonally adjusted basis, GDP grew 1 percent from the previous quarter. The Trade Ministry said GDP growth was driven by strong performances of the city-state's wholesale trade, manufacturing, and finance and insurance sectors."

"In particular, robust AI-related demand led to growth in the machinery, equipment & supplies segment of the wholesale trade sector, as well as the electronics and precision engineering clusters within the manufacturing sector, the ministry said in a statement. The ministry kept its 2026 growth outlook steady at between 2 and 4 percent despite downside risks from rising energy and fertiliser prices amid the closure of the Strait of Hormuz to most shipping."

"These factors will weigh on global economic activity for the rest of the year, it said. On the other hand, AI-related demand has remained robust and should continue to support the growth of regional economies throughout the year. Khoon Goh, head of Asia research for ANZ, said the GDP figures likely do not fully reflect the impact of the crisis in the Middle East."

"It will probably be more apparent in Q2, but the solid Q1 GDP sets up a strong base for the rest of 2026, Goh told Al Jazeera. The AI-related investment boom is powering the manufacturing sector, and unless the Singapore economy runs out of oil, strong activity in manufacturing will continue to drive growth, he said."

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