Singapore's Ministry of Trade and Industry reported on Monday that the country's Gross Domestic Product (GDP) grew by 6% year-on-year in the first quarter, continuing the growth momentum from the previous quarter's expansion of 5.7%.

The Ministry noted that despite this, downside risks to Singapore's economic outlook have significantly increased. It stated it will continue to monitor developments closely and adjust the full-year GDP growth forecast if necessary.

On a quarter-on-quarter basis, Singapore's GDP increased by 1% in Q1, slightly lower than the 1.3% growth recorded in the preceding quarter.

The first-quarter growth was primarily driven by robust performances in the wholesale trade, manufacturing, and finance and insurance sectors.

The Ministry highlighted that strong demand related to artificial intelligence notably supported growth in the machinery, equipment, and supplies segment of wholesale trade, as well as in the electronics and precision engineering clusters within manufacturing.

Concurrently, the finance and insurance sector saw broad-based growth, with solid performance in areas such as banking, fund management, and securities trading.

On the other hand, the Ministry pointed out in its latest economic survey that the wholesale trade sector's fuel and chemicals segment and the chemicals cluster in manufacturing contracted. This was attributed to rising prices and supply shortages of crude oil and its derivatives, impacts stemming from the Iran conflict.

In February, the Ministry had revised its 2026 economic growth forecast upward from a range of 1%-3% to 2%-4%. At that time, global financial conditions were expected to support worldwide economic growth. However, the global economic outlook has deteriorated since the outbreak of the Iran conflict.

Disruptions to the supply of energy and other critical inputs like fertilizers and aluminum, caused by blockades in the Strait of Hormuz, have led to a surge in global energy and other input costs. The Ministry stated that this has intensified inflationary pressures.