Singapore has more than doubled its annual economic growth forecast for this year, driven by strong exports tied to artificial intelligence. Analysts say the move vindicated a government that has invested heavily in AI since 2023.
The Ministry of Trade and Industry (MTI) said it now expects real gross domestic product to grow 4.5% to 5.5% this year, more than double the low end of its earlier 2% to 4% projection, according to CNBC on the 11th. It was the second time this year that Singapore raised its growth forecast. The MTI's initial estimate earlier this year stood at 1% to 3%.
Singapore's economy grew 5.9% in the second quarter, above the 5.7% reported in the advance estimate. The MTI said the second-quarter performance was driven mainly by manufacturing, wholesale trade, and finance and insurance.
"Strong global AI-related demand in particular drove growth not only in the electronics and precision engineering clusters within manufacturing, but also in the machinery, equipment and supplies segment within wholesale trade," the MTI said in a press release. It added that the AI investment wave was proving stronger than expected, and that as AI-related capital spending accelerates further, the growth outlook would brighten for countries connected to the global technology value chain.
A smaller-than-feared impact from tensions between the United States and Iran also helped. The MTI said releases from oil reserves and a shift toward alternative energy sources had capped the rise in global energy prices.
Singapore identified AI early as a national growth engine and has pursued large-scale government investment and support policies. In January this year, the government announced plans to invest 1 billion Singapore dollars (about 1 trillion won) in public AI research through 2030.
Earlier, in 2024, Singapore allocated 500 million Singapore dollars to secure high-performance computing resources, aiming to build the infrastructure needed for AI innovation in the private and public sectors. It also said it would invest more than 500 million Singapore dollars in AI research and development through AI Singapore, a national program aimed at building deep AI capabilities. In 2023, AI Singapore researchers launched an open-source large language model (LLM) called Sea-Lion, short for Southeast Asian Languages in One Network, backed by 70 million Singapore dollars in funding.
On the back of these efforts, investment from major overseas AI companies has continued. Nvidia officially announced in May that it would set up its first AI research center in Singapore. The center, its second in the Asia-Pacific region, will handle research in embodied AI and efficient AI computing. OpenAI also announced an Applied AI Lab in Singapore, and Google DeepMind said it would expand its local presence.
