SINGAPORE, May 19 (Xinhua) -- The International Monetary Fund has projected Singapore's economic growth to ease to 3.5 percent in 2026 and 2.7 percent in 2027, citing the impact of the Middle East conflict on energy prices and global supply chains.
"Before the war in the Middle East, growth was expected to moderate gradually from 2026 with a normalization in private investment and net exports," the IMF said in a statement on Monday following its 2026 Article IV Consultation with Singaporean authorities and stakeholders held from May 7 to May 18.
The IMF said higher input costs and short-lived supply chain disruptions are expected to weigh on energy-intensive and trade-related industries.
However, it noted that the ongoing global artificial intelligence (AI)-driven tech upcycle continues to support Singapore's economy.
"Singapore is navigating another year of elevated global uncertainty," the IMF said, adding that the economy entered the period from "a position of strength," with growth averaging 3.9 percent between 2023 and 2025.
Meanwhile, the city state's headline inflation is forecast to rise to 2.6 percent in 2026 due to the pass-through effects of higher energy prices before easing to 1.9 percent in 2027 as second-round inflationary pressures remain contained.
The IMF warned that risks to growth and inflation remain skewed to the downside and upside, respectively, amid the possibility of a prolonged Middle East conflict, which could trigger broader inflationary pressures and weaken global demand.
Rising global trade tensions or a potential slowdown in the AI boom could also hurt Singapore's export-oriented economy, it added.
The IMF, however, welcomed Singapore's efforts to promote AI adoption and strengthen workforce reskilling and upskilling initiatives to address labor market disruptions linked to the increasing use of AI. ■