Singapore economy enters 2026 with strong 4.8 per cent growth, driven by AI-related demand, says PM Wong

The ‘little red dot’ of Singapore has entered the year 2026 with a stronger-than-expected growth figure of 4.8 per cent, notwithstanding the continued global turbulence, said Singapore Prime Minister and Finance Minister Lawrence Wong in his New Year’s message.

The country has “benefitted from an AI-related surge in demand for semiconductors and electronics”, he said, and consequently, “real incomes have risen”.

Marking SG60 in 2025, the island nation stood firm amid the geopolitical churn, especially the Russia-Ukraine war; the “precarious” Gaza situation; and the Thailand-Cambodia conflict “closer to home”.

In Singapore, a new phase began, as the people “entrusted a new government with a clear mandate to lead our nation in a changed world”, said PM Wong.

Analysing the global situation, he said that 2025 “marked a major turning point — a year that signalled the end of the global order that we had long operated in”.

In this new global economy, “countries are reconfiguring trade networks and supply chains in the name of resilience and security”, said PM Wong.

Even as external troubles continued to fester, “Singapore delivered stronger-than-expected growth of 4.8 per cent”.

In his analysis of how Singapore ended the past year on a high note, PM Wong said, “Global economic growth turned out to be more resilient than anticipated. The US tariffs were imposed later, and at lower levels, than many had feared. We also benefitted from an AI-related surge in demand for semiconductors and electronics. As a result, unemployment and inflation remained low, and real incomes have risen across the board.”

As he always does, PM Wong warned against any kind of complacency in view of the strong growth data. He said, “This is a better outcome than we expected, given the circumstances. But we must be realistic: sustaining this pace of growth will be challenging.”

There are many factors that are beyond the control of a small nation, and those factors are not going away anytime soon.

PM Wong pointed out, “Fractured trade and geopolitical tensions are not transient problems, but permanent features of a fragmented world. We will face more obstacles to growth, and inflationary pressures may intensify. As a small and open economy, Singapore cannot fully shield ourselves from these headwinds.”

Emphasising on the sterling reputation that Singapore has built over six decades, the prime minister said that the country’s brand, “trusted and respected”, would be a key factor in attracting investment.

Going into the specifics, he said, “Microsoft, for example, has set up an AI research lab here, their first in Southeast Asia, to drive cutting-edge AI research and develop solutions for industries. And it is not only the major players. A growing number of promising start-ups and growth companies from around the world are making Singapore their launchpad into the region. We have a window of opportunity to attract and anchor more dynamic enterprises.”

Alongside building overall economic resilience, Singapore would remain true to its policy of catering to every income segment, and assisting them as needed. “…We will reinforce our social safety nets to ensure that no one is left behind,” said PM Wong.

Towards the conclusion of his New Year’s message, PM Wong said, “Today, we live in a world that feels darker and more dangerous than before. Yet, history reminds us that Singapore has always found strength in adversity. We endured and progressed because we refused to be defeated — because we faced challenges together, with courage and quiet determination. Sustaining the Singapore miracle requires the same spirit from all of us today.”