Singapore economists raise 2026 growth forecast to 5%

Economists surveyed by Singapore's central bank have revised their growth projections for the city-state upward for 2026, while slightly lowering their inflation expectations for the same period.

The Monetary Authority of Singapore's quarterly survey, conducted in August with responses from 25 economists and analysts, showed the median growth forecast for 2026 has been raised to 5%, up from the 3.5% projected in the previous survey from June. Growth expectations for 2027 also improved, moving to 3.1% from 2.5%.

The upgraded outlook follows stronger-than-expected economic performance, with Singapore's economy expanding 5.9% in the second quarter. In August, the trade ministry had already lifted its official growth forecast for 2026 to a range of 4.5% to 5.5%, up from an earlier projection of 2.0% to 4.0%.

On inflation, respondents now expect core inflation to average 1.9% in 2026, down from the 2% forecast in the previous survey. Headline inflation is projected at 2.1%, lower than the earlier 2.3% estimate. Official data showed inflation rose 2.0% in July from a year earlier, with the central bank cautioning that price pressures would remain elevated through the first half of next year.

The survey also highlighted key risks to the outlook. Around half of the respondents cited a prolonged or escalating conflict in the Middle East as a major downside risk, while 29.4% flagged the potential bursting of the artificial intelligence bubble as a concern.

Regarding monetary policy, 45% of respondents expect the slope of the Singapore dollar nominal effective exchange rate policy band to be increased at the October policy review, while the remaining respondents anticipate it will stay unchanged. The central bank had unexpectedly tightened monetary policy in late July, citing persistent inflationary risks stemming from the Middle East conflict, which has driven up energy costs.