IMF sees slower Singapore growth amid energy shock risks
The International Monetary Fund (International Monetary Fund) has projected that Singapore’s economic growth will ease to 3.5% in 2026 and further to 2.7% in 2027, citing the impact of the ongoing Middle East conflict on energy prices and global supply chains, News.Az reports, citing Xinhua.
In a statement released on Monday following its 2026 Article IV Consultation with Singaporean authorities and stakeholders held from May 7 to May 18, the IMF said that prior to the conflict, growth was expected to gradually moderate from 2026 onward. This earlier outlook was based on a normalization in private investment and net exports.
However, the IMF now expects higher input costs and temporary supply chain disruptions to weigh on energy-intensive industries as well as trade-related sectors.
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At the same time, the Fund noted that the global artificial intelligence (AI)-driven technology cycle continues to provide support for Singapore’s economy.
The IMF said Singapore is “navigating another year of elevated global uncertainty,” but emphasized that the economy entered this period from a position of strength, with growth averaging 3.9% between 2023 and 2025.
Inflation in Singapore is also expected to rise, with headline inflation projected at 2.6% in 2026 due to higher energy prices being passed through to consumers. It is then forecast to ease to 1.9% in 2027 as broader inflationary pressures remain contained.
The IMF warned that risks to both growth and inflation are tilted downward for growth and upward for inflation. It highlighted that a prolonged Middle East conflict could further increase inflationary pressures and weaken global demand.
The Fund also pointed to additional risks, including rising global trade tensions or a potential slowdown in the AI investment boom, both of which could negatively affect Singapore’s export-driven economy.
Despite these risks, the IMF welcomed Singapore’s efforts to promote AI adoption and to strengthen workforce reskilling and upskilling programs aimed at reducing labor market disruptions caused by increasing automation and AI use.
By Nijat Babayev
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