In Asia, China’s GDP growth is expected to moderate, mainly on account of easing exports growth as economic growth in China’s key trading partners softens and trade barriers continue to rise. Meanwhile, GDP growth in the key Southeast Asian economies is projected to be supported by consumption and investment growth amidst fiscal and monetary policies. Nonetheless, growth is expected to ease relative to that in 2025 for most of these economies as softening commodity prices, the U.S. tariffs and slower global trade growth are likely to weigh on their exports.
The global economic outlook is subject to both upside and downside risks. On the one hand, stronger-than-projected upswing in the AI investment cycle could provide a greater boost to electronics demand and drive further gains in equity markets. The former would have positive spillovers on global trade, while the latter could lift global consumption from wealth effects. On the other hand, a renewed escalation in tariff actions or flare-ups in geopolitical tensions could lead to a resurgence in economic uncertainty, which would weigh on the sentiments of businesses and households. This could then dampen business investments and hiring.
Furthermore, an escalation in risk-off sentiments or a sudden pullback in global AI-related capital spending could trigger sharp corrections in global financial markets, with spillovers to a broader economic activity.
Against this backdrop, the 2026 growth outlook for the manufacturing and trade-related sectors in Singapore has improved since November. Within the manufacturing sector, the electronics cluster is projected to grow at a stronger pace than previously expected, supported by robust demand for semiconductor chips in the data centre end-market due to the AI investment boom. This will have positive spillover effects on the pricesion engineering cluster and the machinery, equipment & supplies segment of the trade sector. At the same time, strong order books in the aerospace and marine & offshore engineering segments should continue to drive growth in the transport engineering cluster.
Meanwhile, key outward-oriented services sectors are also projected to register healthy growth. In particular, the information & communications sector will be supported by sustained enterprise demand for AI-enabled and other digital solutions, while the finance & insurance sector will be bolstered by supportive macroeconomic and financial conditions.
Among the domestically-oriented sectors, the construction sector is expected to expand at a steady pace due to expansions in both public residential building and civil engineering works.
Modify on 2026-02-25 18:56
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