Singapore’s economic growth is projected to moderate over the next two years, with the International Monetary Fund (IMF) forecasting a decrease from 5% in 2025 to 3.5% in 2026, and further to 2.7% in 2027. This slowdown follows a period of expansion driven by technology-related exports and investments, particularly in artificial intelligence (AI) and semiconductors.
Investment remains a key structural driver, with gross capital formation expected to rise from 22.5% of GDP in 2025 to 23.4% in 2026 and 23.7% in 2027. The IMF highlights ongoing initiatives in infrastructure, manufacturing, and digitalisation as crucial for sustaining growth. The S$37 billion Research, Innovation and Enterprise (RIE2030) plan is noted for its role in supporting innovation and workforce development.
Despite the positive outlook, the IMF warns of potential risks, including trade fragmentation, geopolitical tensions, and energy-price shocks. However, Singapore’s strong fiscal and foreign reserve buffers, along with a well-capitalised banking system, are seen as stabilising factors.
The IMF’s assessment underscores themes such as AI-driven productivity and investment-led growth, which align with trends in the Singapore equity market. Key sectors include financial services, infrastructure, and technology, with companies like DBS Group Holdings and Singapore Technologies Engineering playing significant roles.
Singapore’s position as a regional hub continues to bolster its economy, supported by a current account surplus and substantial reserves. The IMF’s projections suggest that whilst growth may slow, the country’s strategic investments and robust financial system will continue to drive economic activity.
