• Singapore's GDP grew 6% year-on-year in Q1 2026, exceeding expectations.
• The growth is primarily driven by demand for artificial intelligence and strong performance in manufacturing and finance.
• Despite strong growth, the Ministry of Trade and Industry warns of rising risks from the ongoing Iran conflict.
• Singapore maintains its growth forecast for 2026 at 2-4% amid global economic uncertainties.
• Core inflation remains manageable, with a slight increase to 1.7% in March, below the central bank's comfort level.

Singapore's economy has shown remarkable resilience, recording a growth rate of 6% year-on-year in the first quarter of 2026, surpassing the previously anticipated figure of 4.6%, according to the Ministry of Trade and Industry (MTI) on May 25. This growth has been significantly driven by surges in artificial intelligence (AI) demand, particularly within the manufacturing and wholesale trade sectors. On a seasonally adjusted basis, the economy expanded by 1% from the previous quarter, outperforming forecasts for contraction, as highlighted by Channel News Asia, South China Morning Post, Reuters, and Al Jazeera.

Driving this growth, the wholesale trade, manufacturing, and finance and insurance sectors performed strongly, with significant contributions from AI-related demand in machinery, equipment, and semiconductor production. The MTI sustained its economic growth forecast for 2026 at 2-4%, despite acknowledging increased downside risks from global challenges, particularly the ongoing conflict in the Middle East which has contributed to rising energy prices impacting global supply chains, according to Channel News Asia, and South China Morning Post.

While the growth figures reflect a strong foundation, officials have cautioned that the impact of the Iran conflict may become more pronounced as 2026 progresses, potentially destabilizing energy prices and affecting manufacturing sectors heavily reliant on imports. "Downside risks to Singapore’s economic outlook have risen significantly," stated Beh Swan Gin, MTI's permanent secretary, emphasizing the need for continued monitoring of international developments, as reported by Reuters and Al Jazeera.

Furthermore, Singapore's inflation situation remains relatively stable, with core inflation rising slightly to 1.7% in March 2026, remaining below the central bank's comfort threshold of 2%. This stability in core inflation, combined with resilient growth, signals a cautiously optimistic framework for Singapore's economy moving forward, as outlined by South China Morning Post and Reuters.