Singapore's economy continued to grow in the second quarter of this year, but its growth rate began to slow compared to the previous quarter.
According to preliminary estimates from Singapore's Ministry of Trade and Industry (MTI), the country's gross domestic product (GDP) grew by 5.7% compared to the same period last year.
While this figure is still higher than most analysts' expectations of 5.5%, it is lower than the 6.3% growth recorded in the first quarter.
The slowdown comes as geopolitical tensions in the Middle East have again escalated, thus affecting global trade and investment.
This situation has caused the benefits of increasing demand for artificial intelligence (AI) technology to be insufficient to offset the risks arising from global economic uncertainty.
The manufacturing sector was the only sector to record faster growth in the second quarter.
This performance was driven by strong demand for electronics and precision engineering products related to the development of AI technology.
In fact, Singapore's electronics exports were almost twice as high in May compared to the same period last year.
However, the construction sector and most services sectors showed slower growth.
In terms of quarter-on-quarter growth, Singapore's economy expanded by 1.1%, slightly lower than analysts' expectations of 1.3%.
Previously, Singapore's Prime Minister, Lawrence Wong, also warned that the full impact of the conflict in the Middle East is yet to be fully felt. He expected continued uncertainty over economic growth and inflation, in addition to rising global energy prices that are expected to increase household electricity costs.
For now, the Singapore government is still maintaining its economic growth forecast of between 2% and 4% for the whole of 2026.
Full data on the second quarter economic performance is expected to be announced in August, while the Singapore central bank is expected to maintain its monetary policy at the end of July due to the still-understated inflation rate.
