Singapore's Ministry of Trade and Industry (MTI) upgraded the region's full-year 2026 GDP growth forecast to a range of 4.5% to 5.5%, significantly higher than the previous projection of 2% to 4%.

The higher forecast reflects expectations that strong global AI-related demand will help cushion the economic impact of the US-Israel-Iran conflict, the MTI said Tuesday.

Singapore's economy grew 5.9% year over year in the second quarter, slowing from the 6.3% growth in the first quarter. On a seasonally adjusted quarter-over-quarter basis, the economy expanded 1.4% in Q2, accelerating from the 1.2% growth in Q1, according to preliminary data.

The second-quarter expansion was driven by strong performances in the manufacturing, wholesale trade, and finance and insurance sectors.

For the first half of the year, Singapore's GDP grew 6.1% from a year earlier.