SINGAPORE, Feb 10 — Singapore today upgraded its economic growth forecast for this year thanks to a boom in demand for AI-related products and as global trade “remained resilient” in the fact of Donald Trump’s tariff campaign.

The trade ministry said gross domestic product is expected to expand 2.0-4.0 per cent in 2026, compared with its previous forecast of 1.0-3.0 per cent.

The announcement comes after growth came in at 5.0 per cent last year as a strong October-December helped it top the 4.8 per cent estimated.

“The global economy has outperformed expectations, with most major economies turning in stronger-than-expected growth in the fourth quarter of 2025,” the ministry said, adding that the strong performance in the fourth quarter was likely to carry into this year.

“Notably, global trade activity remained resilient despite the US tariffs, likely reflecting effective US tariff rates that were lower than the announced headline rates.”

Trade diversion as countries adjusted to the tariffs and “robust AI-related exports amidst the AI investment boom” helped drive the world economy, officials said, adding that investment in artificial intelligence is expected to continue this year.

As a major hub for high-end electronics, Singapore is seeing a significant boost in the production of semiconductors, memory chips, and server components essential for the data centres that power AI.

The city-state’s position as a regional financial and digital hub also allows it to capture investments in AI software and infrastructure.

“Apart from the AI investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in several economies such as the US, Germany and Japan, as well as accommodative global financial conditions, should also support global growth in the quarters ahead,” the ministry said.

However, warned that the pace of growth in most major economies this year “is still expected to ease from 2025 levels, in part due to the drag from the full-year impact of the US tariffs and rising trade barriers that would weigh on non-AI-related global trade”.

The wealthy Southeast Asian nation is heavily reliant on international trade and is vulnerable to any global slowdown. — AFP