UOB’s Jester Koh reported that Singapore’s first quarter 2026 GDP was sharply revised higher, prompting the bank to raise its 2026 GDP growth forecast to 3.2%, up from the previous 2.5% estimate. This revision comes as the Ministry of Trade and Industry (MTI) maintained its official 2026 growth forecast at 2.0–4.0% [1]. The upward adjustment is attributed to sustained demand related to artificial intelligence (AI) and robust indicators in the electronics sector. Specifically, the April electronics Purchasing Managers' Index (PMI) improved to 51.7 from 51.4 in March, with the new orders subindex rising to 52.3 (March: 52.0) and the order backlog subindex increasing to 51.7 (March: 51.4) [1].
Further supporting the positive outlook, South Korea’s first 20-day export data for May showed a 202% year-on-year surge in semiconductor exports, which UOB interprets as evidence that AI-related tailwinds could continue to bolster Singapore’s growth in the second and possibly third quarter of 2026. These gains are expected to fully offset the negative impact from energy and petrochemical input supply disruptions linked to the ongoing Middle East conflict [1].
Despite the optimism, UOB highlights significant downside risks. The bank notes that its forecast is subject to 'significant left-tail risks,' particularly depending on the duration and extent of supply disruptions. The Economic Survey of Singapore 1Q26 also warns that higher electricity prices and material disruptions to critical semiconductor inputs such as helium, bromine, and sulfur could slow semiconductor production [1].
Under the baseline scenario, UOB expects Singapore’s growth to run moderately above potential in 2026, with an estimated positive output gap of 0.6% [1].
CONCLUSION
Singapore’s 2026 growth outlook has been revised higher due to strong AI-driven demand and electronics sector performance, but significant risks remain from potential supply disruptions tied to the Middle East conflict. The market takeaway is cautiously optimistic, with upside potential balanced by notable downside risks.