Economic forecast for Singapore

19.05.2026

Singapore’s economy performed strongly in 2025, supported by the global technology cycle, front-loaded trade activity, resilient services and firm financial-sector performance. Growth is expected to moderate in 2026–2027 as external demand normalises and global trade conditions become more uncertain, but activity should remain supported by electronics, AI-related investment, financial services and tourism. Inflation is expected to rise in 2026 after very low price pressures in 2025, mainly due to higher energy costs, before easing again. Public finances remain strong, with continued budget surpluses and very large public-sector assets, while the external position remains supported by a sizeable current account surplus.

Growth moderates after a strong technology-led expansion

Singapore’s real GDP expanded by 5.0% in 2025, stronger than initially expected. Growth was supported by the electronics upturn, AI-related demand, financial services, tourism and front-loaded trade activity ahead of possible global trade disruptions. The manufacturing sector benefited from demand for semiconductors and precision engineering, while services activity was supported by finance, wholesale trade, transport and tourism-related sectors.

Growth is expected to slow in 2026–2027 as the exceptional momentum of 2025 fades. The official 2026 forecast range is 2.0%–4.0%, while IMF projections point to growth around the upper half of that range. Over the medium term, Singapore’s growth should remain supported by high-value manufacturing, digital services, wealth management, logistics and its role as a regional headquarters hub. However, weak global trade, protectionism and slower growth in major trading partners could weigh on exports.

Inflation rises but remains manageable

Inflation was very low in 2025, reflecting easing imported price pressures and contained domestic cost growth. In 2026, both headline and core inflation are expected to rise to around 1.5%–2.5%, mainly due to higher global energy prices and renewed imported inflation pressures. The Monetary Authority of Singapore tightened policy slightly in April 2026 by increasing the slope of the Singapore dollar nominal effective exchange rate policy band.

Inflation is expected to ease again in 2027 as external energy pressures moderate and domestic demand normalises. The main upside risks come from energy prices, freight costs, food prices and supply-chain disruptions. Singapore’s exchange-rate-centred monetary policy framework remains an important anchor for price stability.

Labour market remains tight but stable

Singapore’s labour market remains resilient, with the overall unemployment rate around 2%. Employment continues to be supported by financial services, professional services, information and communications, tourism and healthcare. Wage growth has moderated from earlier highs but remains supported by tight labour supply and continued demand for skilled workers.

Structural labour-market challenges remain important. Population ageing, skills mismatches and limits on labour-force growth could constrain potential output over time. Policies focused on reskilling, AI adoption, productivity growth and attracting high-skilled talent will be important for sustaining competitiveness.

Public finances remain strong

Singapore’s fiscal position remains sound. The government expects an overall budget surplus of 1.9% of GDP for FY2025 and 1.0% of GDP for FY2026. Fiscal policy remains prudent, with the government aiming to keep the budget balanced over the cycle while preserving space for long-term priorities such as healthcare, ageing, infrastructure, defence, AI and climate resilience.

Gross public debt is high as a share of GDP, but this does not indicate conventional fiscal stress because Singapore borrows mainly for capital-market development and investment purposes rather than to fund recurrent deficits. The government’s strong asset position, fiscal reserves and net investment returns provide substantial buffers. Still, rising social and infrastructure spending will require continued fiscal discipline.

External position remains very strong but trade-exposed

Singapore’s current account surplus remains large, reflecting high savings, strong services exports, investment income and the country’s role as a trade, logistics and financial hub. The surplus is expected to remain around 17% of GDP in 2025–2027, although it may narrow gradually as global trade growth softens and import demand remains firm.

The external outlook is highly sensitive to global trade conditions, electronics demand, energy prices and geopolitical tensions. Singapore is particularly exposed to US-China trade tensions, supply-chain shifts, shipping disruptions and slower growth in China, the United States and Europe. At the same time, AI-related investment, regional financial flows and Singapore’s position as a trusted hub should continue to provide resilience.

Overall outlook

Singapore is expected to maintain steady growth in 2026–2027, although the pace will moderate after the strong 2025 expansion. Inflation should remain manageable despite a temporary rise in 2026, while the labour market and public finances remain strong. The main medium-term challenges are external: global trade fragmentation, energy shocks, geopolitical risks and technology-cycle volatility. Continued investment in AI, advanced manufacturing, financial services, skills and productivity will be central to sustaining long-term growth.

Sources:

Ministry of Trade and Industry Singapore, Economic Survey of Singapore 2025 and GDP Growth Forecast for 2026.

Monetary Authority of Singapore, Macroeconomic Review, April 2026.

Monetary Authority of Singapore, Monetary Policy Statement, April 2026.

International Monetary Fund, World Economic Outlook, April 2026.

International Monetary Fund, Singapore: 2025 Article IV Consultation and Staff Report.

Singapore Budget 2026, Budget Statement and Fiscal Position.