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Growth resilience will be tested
Singapore is confronting the ongoing Middle East conflict from a position of strength, but the renewed geopolitical shock is testing the resilience of its highly open economy. Real GDP growth outperformed again, with an upward revision today to 6.0% yoy and 1.0% qoq sa in 1Q26, above advance estimates of 4.6% yoy and -0.3% qoq sa. The positive adjustment was driven by stronger-than-expected outcomes across the manufacturing, construction, and services sectors.
We still see positive dynamics in key outward-oriented sectors, but expect growth to be uneven and challenged by external uncertainties as the year progresses. Economic prospects in the coming quarters continue to be held hostage by severe disruptions in the Strait of Hormuz and inconclusive US-Iran negotiations.
We maintain our 2026 economic growth forecast at 2.8%, and continue to monitor two-sided risks. The Ministry of Trade and Industry (MTI) also maintained its 2026 GDP growth projection at 2.0-4.0%, in line with our expectations. MTI assessed that the external demand outlook has weakened, taking into account the ongoing Middle East conflict alongside robust artificial intelligence (AI)-related demand, while also highlighting increased downside risks. These include: 1) considerably slower global growth due to prolonged disruptions to global energy supply and other inputs, as well as sustained price increases arising from the Middle East conflict; 2) renewed escalation in US tariff actions; and 3) a sharp correction in global financial markets driven by a worsening of sentiments.
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The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
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DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
[1] This disclaimer may not apply if the applicable assets fall within the definition of 'financial instruments' that are set out in Article 2(1) EU MAR (e.g. financial instruments that are traded on a regulated market, MTF or OTF, etc.). Section C of Annex I of MiFID2 specifies these 'financial instruments'.
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