SINGAPORE, May 19 — Singapore’s economic growth is projected to slow to 3.5 per cent in 2026 and 2.7 per cent in 2027, dragged by the impact of the West Asia conflict, said the International Monetary Fund (IMF).
Its Mission Chief for Malaysia and Singapore Masahiro Nozaki said higher input prices and short-lived supply chain disruptions were putting pressure on energy-intensive and trade-related industries in the republic.
Speaking as the IMF team leader on the 2026 Article IV Consultation with Singapore, he noted that the island republic's headline inflation is forecast to rise to 2.6 per cent in 2026 due to pass-through effects of higher energy prices, although broader second-round effects are expected to remain contained amid stable inflation expectations.
Headline inflation is then projected to ease to 1.9 per cent in 2027.
“Singapore is navigating another year of elevated global uncertainty. Most notably, the war in West Asia is transmitting to the economy through an energy shock.
“Nonetheless, Singapore enters this period of heightened uncertainty from a position of strength,” Nozaki said in a statement today, following the conclusion of the consultation with the Singaporean authorities and other stakeholders from May 7 to yesterday.
He added that the IMF has projected that Singapore’s fiscal surplus will decrease to 1.0 per cent of gross domestic product (GDP) in the financial year (FY2026), from 1.6 per cent of GDP in FY2025, mainly due to higher development expenditure.
“The government should stand ready to provide temporary and targeted support for households and businesses affected by the war in West Asia.
“However, fiscal policy should be carefully implemented to not amplify inflation pressures,” Nozaki said.
He also emphasised that Singapore’s financial sector remains resilient, with banks well-capitalised, liquid, and profitable, and supported by strong asset quality.
Nozaki remarked that the country continues to make progress toward stronger, more inclusive growth, with artificial intelligence now a national growth strategy.
