Singapore's Economic Growth Weakens in Q1
Singapore's economy slowed down in the first quarter, largely missing expectations.The gross domestic product grew by 4.6% year on year, lower than the previous quarter's 5.7% increase, according to the Ministry of Trade and Industry on Tuesday.The GDP is way below the 5.9% rise forecasted by economists surveyed by Reuters.On a quarter-on-quarter basis, the GDP shrank by 0.3%, swinging from the 1.3% growth in the fourth quarter of 2025.The MTI said Singapore's economy stayed resilient during the period, but the impact of the Middle East conflict is expected to reflect in the coming quarters.Among sectors, the manufacturing sector climbed 5% year on year during the quarter, weaker than the 11.4% jump in the prior quarter.The construction sector expanded by 9% from a year earlier, higher than the 4.6% rise in the fourth quarter of 2025.As for services sectors, wholesale and retail trade, and transportation and storage collectively rose by 6.7% year on year, an extension from the 6.8% acceleration in the preceding quarter. Information and communications, finance and insurance, and professional services sectors grew 3.9% year on year, higher than the previous quarter's 3.7% growth. Meanwhile, other services, including accommodation and food services, real estate, administrative and support services, rose 2.3% from a year earlier, easing from the 2.9% climb in the previous quarter.Despite the risks of the war in Iran, the Monetary Authority of Singapore kept its GDP growth outlook of between 2% and 4%. The MAS moderately tightened its monetary policy, raising the rate of the Singapore dollar nominal effective exchange rate policy band amid the global oil price hikes and the threat of higher inflation, which is expected to rise to a range of 1.5% and 2.5% from the previous forecast of 1% and 2%.Deepali Bhargava, ING's regional head of research for Asia-Pacific, said it is likely that the pressures related to the rise of oil prices can be offset by demand for artificial intelligence technology, as well as recent fiscal measures."Taken together, these factors underpin our GDP growth forecast of 3.3% year on year, which lies on the stronger side of the MAS's projected range and closer to the upper end of its midpoint," Bhargava said.