Growth forecast raised to 5%

Private-sector economists have sharply raised their growth forecast for the Singapore economy this year to 5 per cent, from 3.5 per cent in the previous survey, according to the latest survey of professional forecasters released by the Monetary Authority of Singapore (MAS) on Wednesday (Sep 2). The projection is slightly lower than the Ministry of Trade and Industry's (MTI) forecast of 5.5 per cent.

The survey reflects the views of 21 economists and analysts who closely monitor the Singapore economy, MAS said. The most likely outcome is for the economy to grow by 5.0 per cent to 5.4 per cent, with an average probability of 37 per cent, according to the report.

The upward revision comes after the Singapore economy expanded by 5.9 per cent year-on-year in the second quarter of 2026, exceeding the respondents' median forecast of 4.3 per cent in the previous survey. The economy also grew by 6.3 per cent in the first quarter of the year.

Looking ahead, respondents expect the economy to grow by 4.6 per cent year-on-year in the third quarter of 2026 and 3.6 per cent in the final quarter of the year.

For 2027, the median forecast for gross domestic product (GDP) growth is 3.1 per cent.

Key drivers and risks

All respondents identified a sustained AI-driven upturn in the technology cycle as a key support to Singapore's economic outlook, MAS said. Respondents also pointed to a de-escalation or resolution of the West Asia conflict and stronger-than-expected global growth as important upside risks.

On the downside, an escalation or prolonged conflict in West Asia, as well as a bursting of the artificial intelligence (AI) bubble with associated spillovers to financial markets, were cited as the most frequently mentioned risks. CNA's report also listed these as the most frequently cited downside risks, referencing the Middle East conflict.

Inflation and monetary policy

Economists also lowered their inflation forecasts for 2026. The median projection for headline inflation, measured by the Consumer Price Index-All Items (CPI-All Items), was lowered to 2.1 per cent, from 2.3 per cent in the previous survey. Core inflation, which excludes accommodation and private transportation costs, is forecast at 1.9 per cent, down from 2 per cent previously.

For the third quarter, respondents expect headline inflation to come in at 2.5 per cent and core inflation at 2.4 per cent. This comes after headline and core inflation came in at 1.8 per cent and 1.5 per cent respectively in the second quarter, both below respondents' earlier forecasts.

On the labour market front, respondents expect the unemployment rate to remain at 2.1 per cent at year-end, unchanged from the June 2026 survey.

In terms of monetary policy, 45 per cent of respondents expect MAS to tighten policy in October by increasing the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, up from 30 per cent in the previous survey. The remaining respondents expect no change to the slope. Almost all respondents expect no change to the monetary policy stance in January 2027.

Outlook for next year

For 2027, headline and core inflation are both forecast to come in at 2 per cent, according to the survey.