If you are saying, it surely cannot get better than this, you are probably right. There are both short-term and long-term reasons why the current optimism about growth prospects could turn out to be misplaced.
Last year, Singapore’s economic growth of 5% blew past virtually every single forecaster’s expectations, and that was after a very strong 5.3% expansion in 2024. The government has now upgraded its forecast for this year to a 2%-4% range, up by one full percentage point. It believes that key drivers such as the rapid growth in global spending on AI are likely to continue this year. Other official data shows that this growth has trickled down to benefit a broad swathe of Singaporeans, with median incomes rising by 6.8% in inflation-adjusted terms last year.
Moreover, there is a strong pipeline of new investments in both manufacturing and services sectors that should support growth this year and next. In addition, the external accounts remain in a large surplus, inflation is low, and the government’s coffers are full, as seen by the extraordinary growth in the budget surplus.
