Despite strong y-o-y GDP growth in 1Q2026, Singapore now faces heightened vulnerability due to its reliance on imported energy and trade.
This was noted in a statement by S&P Global Market Intelligence.
The firm also noted that the Monetary Authority of Singapore (MAS) slightly increased the rate of appreciation of the S$NEER policy band, while keeping its width and midpoint unchanged, in response to rising cost pressures from global supply disruptions and energy price surges.
Grim outlook
According to S&P Global Market Intelligence Senior Economist Ahmad Mobeen in the statement, the MAS expects inflation to pick up and remain elevated over the coming quarters, “driven primarily by imported cost pressures linked to energy and supply chain disruptions”.
“The central bank raised its 2026 forecast range for both core and headline inflation to 1.5-2.5% from 1.0-2.0% previously,” Mr Mobeen noted in the statement.
As a result, S&P Global Market Intelligence projects Singapore’s overall inflation at 2.2% in 2026.
Ther firm also expects Singapore’s growth outlook to weaken over the course of 2026.
“Higher input costs and uncertainty around global shipping and energy supplies will weigh on operations and profitability of businesses in energy-intensive sectors such as petrochemicals, electronics and transport, while rising inflation will also dampen real domestic demand growth,” the statement noted.
An analysis by the company also placed Singapore among the ‘squeezed’ economies of APAC “facing concurrent inflation and growth-constraining pressures as the Middle East war continues”.
Mr Mobeen also commented to Asia Insurance Review: “The move by MAS underscores how prolonged energy and shipping disruptions due to the Middle East war are set to keep imported inflation elevated, and Singapore’s growth outlook will become increasingly fragile the longer the disruptions last, given its highly open economy.
“We expect higher costs to squeeze corporate margins and household real demand, though continued technology-focussed investments, targeted fiscal support and lingering AI-related export demand will help partly counterbalance this challenging environment.”