According to a press release by the Ministry of Trade and Industry (MTI) on Monday (25 May), Singapore’s economy performed better than expected in the first quarter of 2026, with GDP expanding 6% year-on-year, extending the 5.7% growth recorded in the previous quarter.
Despite this strong start, MTI has maintained its GDP growth forecast for the full year at 2%–4%, citing rising global risks and energy costs, particularly in relation to the ongoing US-Israel-Iran conflict.
MTI said the robust first-quarter performance was largely driven by artificial intelligence (AI)-related industries, particularly in electronics, precision engineering, and machinery and equipment for data centres.
Source: 480 Studio & Agency. Image for illustration purposes only.
The finance and insurance sector also contributed, with steady growth from banking, fund management, and securities activities.
Despite the positive growth figures, MTI noted that the global economic outlook has worsened since February due to the US-Israel-Iran conflict.
Source: YouGov
Disruptions to energy supplies and other key inputs, such as fertiliser and aluminium, have pushed global energy costs higher, contributing to inflation and potentially weakening consumer spending.
The ministry noted that oil refineries, petrochemical firms, and downstream chemical companies have already scaled back operations, while transport sectors face higher fuel costs.
A recent YouGov survey published on 12 May found that many Singaporeans are increasingly concerned about rising living costs amid ongoing global tensions.
The survey found that 39% of Singaporeans believe the country could enter a recession within the next six months, while only 15% expect economic growth.
Source: YouGov
On a global scale, 59% of respondents expect a worldwide recession during the same period.
The impact of rising costs is already being felt in daily life, with about 70% of Singaporeans surveyed saying household energy bills have increased due to the ongoing conflict.
Moreover, 56% reported paying more for groceries.
Half of respondents also said commuting costs had risen, while nearly half noticed higher prices for dining out and food delivery services.
Beyond financial concerns, 27% of respondents said the ongoing uncertainty has caused them stress or anxiety.
The survey also found that Singaporeans are changing their spending habits to cope with higher costs.
Source: YouGov
Around 38% said they are relying more on deals, vouchers, and promotions to manage expenses, while 31% reported saving more and keeping additional cash reserves.
Others have started cutting back on transport and travel expenses, with 26% switching to public transport or alternative travel methods to reduce fuel-related costs.
One in five respondents also said they had delayed travel plans due to rising uncertainty and costs.
MTI noted that the Government’s earlier disbursement of CDC vouchers in June, alongside enhancements to the Budget 2026 Cost-of-Living Special Payment, could help cushion the impact on households.
Although Singapore’s GDP growth forecast remains unchanged at 2% to 4%, MTI cautioned that risks to the economy have increased significantly.
The ministry said Singapore’s external demand outlook has weakened compared to earlier assessments this year, particularly for sectors affected by higher fuel prices and supply shortages.
Still, MTI said stronger-than-expected economic performance in the first quarter helped support its decision to maintain the forecast range for now.
“MTI will continue to monitor developments closely and adjust the GDP growth forecast over the course of the year if necessary,” the ministry said.
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Featured image adapted from Factually, for illustration purposes only.