By Anas Abu Hassan
SINGAPORE, Sept 30 (Bernama) -- Singapore's economy is projected to moderate slightly to 4.8 per cent in 2026 from 5.0 per cent last year, driven by electronics upcycle led by artificial intelligence (AI), said the ASEAN+3 Macroeconomic and Research Office (AMRO).
AMRO lead economist and mission chief Runchana Pongsaparn said the republic's exports and investment continue to benefit from strong global demand for AI-related products.
Nevertheless, she noted that higher global oil prices and slower global demand from the West Asia conflict are expected to weigh on growth.
"This is why we projected some slight moderation.
"In any case, we may revise our projection after the third-quarter gross domestic product (GDP) figures are released in a few weeks’ time,” she said in a media briefing on AMRO’s 2026 Annual Consultation Report on Singapore Wednesday.
Pongsaparn said the republic's annual inflation is expected to rise from 0.9 per cent in 2025 to 2.1 per cent this year, driven by higher global energy and commodity prices due to the West Asia conflict, with further pass-through expected as electricity tariff are adjusted for the rest of the year.
"The underlying inflationary pressure has been broadly contained, thanks to a strong Singapore dollar, as well as the targeted subsidies, while the near-term risks are broadly balanced," she added.
Moving forward, she highlighted that renewed escalation of the West Asia conflict remains the most salient downside risk to the country's projected growth.
In addition, possible weaker-than-expected AI demand and lingering United States trade restriction, which still provides some uncertainty may also be on the negative side.
"But at the same time, we could also see a positive boost from better-than-expected AI demand and so on.
"Over the longer term, structural challenges – such as geoeconomic fragmentation, population ageing, energy sustainability pressures and uneven AI adoption – could weigh on potential growth and competitiveness, underscoring the need to accelerate structural reforms," she said.
Meanwhile, AMRO chief economist, Dong He said Singapore is well-placed to advance regional integration in its capacity as ASEAN Chairman in 2027.
"Its strong regulatory framework and financial innovation reinforce its role as a regional financial hub.
"Singapore can also play a catalytic role in strengthening ASEAN's energy security," he said.
-- BERNAMA