Singapore economy surges as AI demand drives GDP growth to 5.9% in Q2, forecast raised to 5.5%

Singapore raises economic growth outlook on AI boom

Singapore's economy expanded 5.9 per cent in the second quarter from a year earlier as it benefited from the global surge in spending on artificial intelligence and shrugged off disruption to energy markets from the war in the Middle East. The city-state's Ministry of Trade and Investment on Tuesday raised its full-year growth outlook to 4.5 per cent to 5.5 per cent. That was a stark uptick from its previous estimate in May of growth of 2-4 per cent, which was based on expectations of the war in Iran weighing on global economic growth. For the first half of the year, GDP growth was 6.1 per cent on a year earlier, the ministry said. As an international trade hub, Singapore is heavily exposed to geopolitical disruption. The city-state is one of the world's most important oil and gas trading centres -- earning it the moniker of the "Houston of Asia" -- and was seen as particularly susceptible to the global energy crisis. "The effects of the conflict continue to ripple across the world -- through higher energy prices, disrupted supply chains and increased costs for households and businesses," Prime Minister Lawrence Wong said during his National Day speech this weekend. "Despite the challenges, Singapore's economy has remained resilient. Growth has been robust in the first half of the year, and we expect the momentum to continue," he added. The MTI said the impact of the Iran war had been less severe than expected, as countries had drawn down on oil stockpiles and switched to alternative energy sources, which led to a cap on prices. At the same time, the MTI said investment in AI had been stronger than anticipated, a boon for producers and exporters of AI-related products such as semiconductors. The big four hyperscalers in the US -- Google, Amazon, Microsoft and Meta -- have made a total of $1.1tn of capital expenditure on data centres, advanced chips and the power to run them since the beginning of the AI boom in 2023. Those investments have increased this year, and Singapore is positioning itself to be a major AI hub. "AI is already transforming industries and changing the way we work," Wong said. "Here in Singapore, we will make full use of AI to raise productivity and create better jobs." But the positive outlook on AI for Singapore came just days after the central bank warned of the risks to the global economy if the AI boom falters. The Monetary Authority of Singapore, which is also the city-state's financial regulator, said global growth, investment and financial market performance were deeply tied to the semiconductor and data centre sectors, and any slowdown could have far-reaching consequences. "If . . . there is a major retrenchment in AI investment, it could sharply weaken global growth through a fall in business investment and semiconductor demand and negative wealth effects," warned Chia Der Jiun, the authority's managing director. "A sharp tightening of global financial conditions could result." The MAS warnings coincided with a hit to the stocks of some of the biggest chipmakers over fears of the durability of the AI boom.

Singapore says AI-related demand lifting economy

Singapore (AFP) - Singapore sharply raised its forecast for economic growth in 2026 on Tuesday as robust AI-related global demand boosted activity. Gross domestic product is now expected to expand by 4.5 to 5.5 percent year-on-year in 2026, up from a previous forecast of 2.0 to 4.0 percent, the government said. "This reflects the better-than-expected performance of the Singapore economy in the first half of the year, as well as an improved outlook for the rest of the year due to the acceleration in global AI-related capital expenditure," the Ministry of Trade and Industry said in a statement. Growth in the second quarter of this year was driven by manufacturing, wholesale trade, and the finance and insurance sectors, it said. Strong AI-related demand helped the electronics and precision engineering clusters of the manufacturing sector, as well as the machinery, equipment and supplies segment of the wholesale trade sector, it said. Singapore's government has said it expects global demand related to artificial intelligence will help cushion the city state's economy from the impact of war in the Middle East. While AI investment has been "stronger than expected", it says the Iran war's impact on the wider global economy has been "less severe than initially feared."

Singapore says AI-related demand lifting economy

Strong AI-related demand helped the electronics and precision engineering clusters of the manufacturing sector, as well as the machinery, equipment and supplies segment of the wholesale trade sector, it said. Singapore's government has said it expects global demand related to artificial intelligence will help cushion the city state's economy from the impact of war in the Middle East. Singapore sharply raised its forecast for economic growth in 2026 on Tuesday as robust AI-related global demand boosted activity. Gross domestic product is now expected to expand by 4.5 to 5.5% year-on-year in 2026, up from a previous forecast of 2.0 to 4.0%, the government said. "This reflects the better-than-expected performance of the Singapore economy in the first half of the year, as well as an improved outlook for the rest of the year due to the acceleration in global AI-related capital expenditure," the Ministry of Trade and Industry said in a statement. Growth in the second quarter of this year was driven by manufacturing, wholesale trade, and the finance and insurance sectors, it said. Strong AI-related demand helped the electronics and precision engineering clusters of the manufacturing sector, as well as the machinery, equipment and supplies segment of the wholesale trade sector, it said. Singapore's government has said it expects global demand related to artificial intelligence will help cushion the city state's economy from the impact of war in the Middle East. While AI investment has been "stronger than expected", it says the Iran war's impact on the wider global economy has been "less severe than initially feared."

Singapore Manufacturing PMI Signals Expansion Fueled by AI Wave

SINGAPORE--A key gauge of Singapore's manufacturing activity expanded in July, bolstered by a wave of artificial intelligence-related demand. The purchasing managers index, compiled by the Singapore Institute of Purchasing and Materials Management, rose to 51.4 in July, slightly higher than June's 51.3. A reading above 50 signals expansion, while a reading below 50 indicates contraction. The reading reflected stronger growth in new orders, exports, input purchases and employment, though factory output posted a slower expansion, SIPMM said Monday. The latest PMI reading indicates that the city-state's manufacturing sector remains supported by the AI-driven semiconductor supercycle, which is boosting robust order inflows and employment, said Stephen Poh, executive director at SIPMM. "However, the collapse of the Middle East ceasefire has triggered a supply chain crisis, sending input prices soaring and severely crippling supplier delivery times," Poh added. The PMI for electronics, which accounts for about one-third of Singapore's manufacturing output rose slightly to 52.4 in July from 52.2 in June, driven by stronger expansion in new orders, new exports, factory output, input purchases, and employment. Manufacturing growth should continue to be supported by global AI-related tailwinds, said DBS senior economist Chua Han Teng in a recent note. Strong investments by big technology companies are driving robust demand for electronics and precision engineering products, including memory chips, server-related products and semiconductor equipment, Chua added.

World's second-richest country's manufacturing sector extends growth on AI demand

Singapore's manufacturing sector continued to expand in July despite prolonged tensions in the Middle East that have added pressure to global supply chains, with demand driven by AI remaining the key growth engine. The Purchasing Managers' Index (PMI) edged up 0.1 point from June to 51.4 last month, marking 12 straight months of expansion, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Monday. A reading above 50 indicates expansion while one below 50 indicates decline. Within manufacturing, the PMI for the linchpin electronics sector grew by 0.2 points to 52.4, marking the 14th consecutive month of expansion. The sector's new export orders index climbed to 52.6 in July, its highest level since mid-2018. Meanwhile, the finished goods index remained in contraction for a third straight month, indicating inventories continued to be kept lean. Economists noted that both the headline manufacturing PMI and the electronics PMI reached their highest levels since November 2018 and January 2018, respectively. The latest data suggest the manufacturing sector of Singapore, ranked the world's second-richest country by GDP per capita in 2025 by The Economist, continues to benefit from the semiconductor "supercycle", fuelled by rising investment in AI. Strong demand for chips and electronic components has boosted new orders while supporting hiring across the manufacturing sector. Economists expect AI-related demand to remain the main driver of manufacturing growth in the near term although the benefits are likely to remain concentrated in electronics and related industries. The momentum has largely offset headwinds from higher energy costs and U.S. tariff policies. Robust investment by hyperscale cloud service providers in the second half of 2026 is expected to further drive demand for Singapore-made electronics products, including memory chips and server-related components.