Singapore's economy grew 5.7% in second quarter of 2026, driven by AI demand

Singapore's economy grew 5.7 per cent year-on-year in the second quarter of 2026, easing from 6.3 per cent in the previous quarter based on advance estimates from the Ministry of Trade and Industry (MTI) on Tuesday (Jul 14).

Economic growth for the quarter was also marginally higher than that of the same period last year, which came in at 5.4 per cent.

GDP growth was particularly boosted by strong growth in the manufacturing sector, which grew 12.2 per cent, up from 8.0 per cent in the previous quarter.

According to MTI, growth in the manufacturing sector was largely driven by output increases in the electronics and precision engineering clusters due to strong AI-related demand for semiconductors and semiconductor manufacturing equipment.

The chemicals and biomedical manufacturing clusters contracted, however, particularly due to feedstock disruptions arising from the conflict in the Middle East. 

Construction sector growth cools

The ministry also noted that growth in the construction sector was significantly lower than that of the previous quarter, coming in at 6.2 per cent compared to 12.9 per cent three months ago.

Growth during the quarter was supported by an increase in both public and private sector construction output, said MTI.

Overall growth in the services sector also eased to 4.6 per cent year-on-year, down from 6.2 per cent in the previous quarter.

The wholesale and retail trade, and transportation and storage sectors collectively grew by 6.3 per cent in the second quarter, moderating from the 9.3 per cent growth in the previous quarter. 

All sectors within the group expanded during the quarter, with growth in the wholesale trade sector driven by the machinery, equipment and supplies segment, which grew in line with strong electronics exports growth. 

At the same time, growth in the transportation and storage sector was led by the water transport segment. 

The group of sectors comprising the information and communications, finance and insurance and professional services sectors expanded by 3.9 per cent year-on-year in the second quarter, extending the 4.5 per cent growth in the previous quarter, said MTI.

Growth in the information and communications sector was particularly bolstered by continued strong demand for IT and digital solutions.

The remaining services sectors — accommodation and food services, real estate, administrative and support services and other services industries — grew by 2.7 per cent year-on-year in the second quarter, easing from the 3.2 per cent growth in the preceding quarter. 

All sectors within the group registered growth during the quarter, except for the food and beverage services sector, with the real estate sector expanding on the back of steady growth in developer activities. 

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dana.leong@asiaone.com