Economists have on Monday foresee artificial intelligence (AI) boom to continue to drive Singapore’s economy after the city state reported a resilient growth of 6 percent in the first quarter, underpinned mainly by strong AI demand.
Maybank Investment Bank said in a note that the AI capital expenditure (capex) boom will likely be sustained into the second half of 2026 with US hyperscaler tech firms ramping up capex guidance further in the latest earnings season.
“This will drive Singapore’s production and exports of memory chips and server-related products, benefiting the manufacturing and wholesale trade sectors,” said the research house.
Singapore’s manufacturing expanded by a robust 7.9 percent in the first quarter, albeit cooling from the 11.4 percent growth in the fourth quarter of 2025.
The growth was led by electronics which hit a new high of 26.1 percent, amid a pickup in AI-related demand for memory chips and servers/server-related products.
UOB Economics and Markets Research also said in a note that it foresees sustained AI-related tailwinds for the city state, as evidenced by the improvement in the April electronics Purchasing Managers Index (PMI) to 51.7 from 51.4 in March, driven by increases in the new orders and order backlog subindices.
Meanwhile, South Korea’s first 20-day exports data for May showed a 202 percent year on year jump in semiconductor exports, confirming that AI-related tailwinds could continue to support growth in the second quarter of 2026 and possibly third quarter.
According to the research house, Singapore’s wholesale trade which grew 2.3 percent quarter on quarter driven by a surge in output in the machinery, equipment and supplies segment, reflected robust increases in wholesale volumes of telecommunications equipment, computers, and electronic components—linked to AI-related tailwinds.
RHB Investment Bank also said the upside risks for Singapore’s overall growth could emerge from the resilient AI-related demand.
“In the near term, we continue to expect the electronics sector, a key pillar of Singapore’s export economy to maintain its growth momentum, supported by resilient global demand for semiconductor components, integrated circuits (ICs), disk media products, and personal computers, underpinned by robust AI-driven demand,” said the research house.
It also said Singapore’s electronics export momentum is expected to remain well supported by the ongoing global tech upcycle which should continue to provide impetus to manufacturing output.
“We recently revise our full-year non-oil domestic export (NODX) projection to 7.5 percent from 3 percent, following the stronger-than-expected export performance in April,
“That said, sustained AI-related capex and resilient regional electronics production should continue to support Singapore’s technology-related industries,” it said.
DBS Group Research also said in a note that Singapore’s trade-related sectors have performed well so far this year, thanks to the AI export boom, which it expects to sustain at least in the near term.
According to the research house, global AI-tailwinds – driven by robust capital expenditure intentions amid the shift towards agentic AI usage – will likely continue supporting external demand for Singapore’s memory chips and server-related products.
“The city-state has benefitted indirectly from its integration into the AI ecosystem, with robust electronics exports momentum to upstream players such as Taiwan, a major beneficiary and strategic player in the AI supercycle,” said the research house.
According to DBS, electronics shipments will continue to be underpinned by supportive new export orders, which expanded for the 11th consecutive month in April 2026.
“While the global semiconductor upcycle is not fully insulated from supply chain challenges arising from helium input shortfalls linked to Middle East disruptions, manufacturers have thus far ensured continued production through existing helium inventories and recycling efforts,
“Nonetheless, key downside risks include rising costs and tighter financial conditions,“ it added.
Singapore government indicated in a statement earlier that AI-related demand has remained robust and should continue to support the growth of regional economies throughout the year.
It also said the gross domestic product (GDP) growth of key Southeast Asian economies in 2026 is projected to be supported by resilient demand for AI-related exports.
It noted sustained global AI-related capital spending should continue to be a key driver of growth for the electronics and precision engineering clusters within the manufacturing sector.
In particular, demand for AI-related semiconductors such as networking and memory chips from the data center end-market is expected to remain robust for the rest of 2026.
Meanwhile, an acceleration in AI-related capital expenditure is also projected to lead to strong demand for semiconductor equipment for the rest of the year.
In turn, the strong performance of the electronics cluster will have positive spillover effects on the machinery, equipment and supplies segment of the wholesale trade sector, said the statement.
Among the outward-oriented services sectors, the information and communications sector is expected to register steady growth due to continued enterprise demand for AI-enabled and other digital solutions.
Singapore’s GDP growth forecast for 2026 has been maintained at 2 to 4 percent.