Despite strong Q1, Singapore PM says H2 economic outlook uncertain as Middle East war drags on
SINGAPORE, June 9 — Singapore’s economy could face slower growth and higher inflation in the second half of the year as the fallout from the Middle East war feeds through more fully, Prime Minister Lawrence Wong said today.
The trade-dependent city-state’s economy expanded six per cent year-on-year in the first quarter, supported by strong demand for artificial intelligence chips.
However, Wong said the impact of the US- and Israeli-led war against Iran, which began on February 28, has yet to be fully reflected in the data.
“It’s good that we ended up better than we expected, and it reflects the diversity and strength of our economy,” he said at a forum organised by the Singapore Press Club.
“But the outlook remains uncertain… we have not felt the full effects of the crisis yet.”
He said the impact of higher oil prices caused by disruptions to shipping through the Strait of Hormuz would only be felt later.
Wong said the global economy had adapted better than expected to the crisis, helped by rerouted shipping, alternative energy supplies from other oil exporters and countries drawing on strategic reserves.
However, he questioned how long those measures could continue to cushion the impact.
“How long will the disruption last… and how long will these buffers last?” Wong said.
“That’s an open question. And if the disruption, if the closure of the Hormuz Strait… continues for more months, then the buffers start to dwindle.”
“There are downside risks, and we do expect more pressures to come on both growth and inflation in the second half of the year.”
Singapore’s trade ministry said last month it was maintaining its forecast for the economy to grow between 2.0 and 4.0 per cent in 2026 after stronger-than-expected first-quarter growth.
However, it said it would continue monitoring global developments and revise its forecast if necessary.
