S’pore beat forecasts by 6% in Q1 – but Singaporeans may not be feeling it. Here is the reason.

Disclaimer: Unless otherwise stated, any opinions expressed below are solely the author’s.

Singapore’s economy continues its impressive rally, as it grew by 6% in the first quarter of 2026, following a very strong year in 2025, when it grew by 5% for the whole year (although expectations following Trump’s tariffs were around 2%).

The data released by the Ministry of Trade and Industry (MTI) seems to contradict the broader views of the business, which I wrote about last week. While the manufacturing and construction sectors are growing, they only contribute ca. 25% of GDP and 20% of employment. Attitude on the other side Services worse, because of the unpredictability and rising energy prices caused by the war with Iran.

Singaporeans themselves don’t seem too happy about the state of the economy, despite the statistics showing a positive picture.

Why is that? And will it change?

Not all industries are created equal

First of all, as we all know, ratings hide sectoral differences. Even if one part of the economy is doing really well, another may not—or, at least, not yet.

This is especially true now, as Singapore’s economic growth is fueled by an insatiable demand for electronics amid the rise of AI around the world. As long as the American tech giant continues to demand more chips, Singapore’s semiconductor industry (and a few related ones) will continue to thrive.

This explains the huge year-on-year jump of 8.2%. Manufacturing Goods sector, in Singapore is bolstered by even stronger construction activity:

Manufacturing industries: +8.20%

However, as I said last week, the mood is not so good everywhere, even within manufacturing itself:

Without electronic and precision machinery, others are less optimistic. Oil again Petrochemicals apparently, they have been badly affected by the events in Iran, seeing their margins tightened and not knowing when the oil and gas flows from the Gulf will start again.

If you are employed in one of those, your views may not be so good, and talk of rapid GDP growth in Singapore may seem like a news report from another country.

Yet, surprisingly, despite the widespread pessimism that has taken hold Services sector, Singapore seems to be doing better than surveys would have you believe.

Or is it?

Service Manufacturing Industries: +5.70%

A 5.7% jump across the board is nothing to complain about. However, the driver behind this figure is very healthy Wholesale Tradewhich recorded an increase of 11.7%, and contributed significantly to the GDP in absolute terms. This is important to remember as Arts, Entertainment and Entertainment it shows an even higher percentage, but its share of GDP is much smaller.

When you consider that whatever is produced—now in larger quantities and at greater cost than ever before—must be sold and shipped, it becomes clear that the boom in wholesale trade is also linked to the AI ​​boom.

Not only are local retailers selling goods made in Singapore, but they are also trading in AI-related products from other countries.

In other words, the really strong economic data published by MTI for Q1, is greatly shaken by the still hot competition of Artificial Intelligence, which may turn out to be a bubble that has popped one day, pushing the country into recession.

Fortunately, it doesn’t have to be this way.

When will Singaporeans feel the difference?

Apart from the strong performance of Place of residence sector, two strong foundations of Singapore’s prosperity– Finance again IT– are also performing well, having grown by 5.7% and 4.3% respectively. Although it is below the 6% average for the rest of the economy, no one can complain about growth of 4% or more under normal circumstances.

Many other areas are not doing too badly, and are up more than 3%. So, we are not just waiting for the day of AI to come, as there is decent work in other areas as well.

However, not all.

Consumer-oriented industries, for example, are not seeing the same boost. Selling it is only doing well, and the situation is very gloomy following the events in the Middle East, as businesses expect a decrease in sales in the next few months due to rising inflation.

IF&Bon the other hand, he is scraping the floor, which is surprising given the closing of hundreds of businesses, badly affected by uncontrollably high rents and increases in other operating costs.

Looking at other jobs that seem low on the list, include Professional Services, Transportation or Admin supportit is clear that there are many people in Singapore who may not feel that the country is prosperous.

Furthermore, even companies in the best-performing industries (except for red-hot AI, perhaps) may be reluctant to give their employees a cut from improved results, for fear of what the future holds.

As we are all affected by high energy prices in one way or another, operating costs over the next six months are difficult to predict. We do not yet know what the outcome of the Iran War will be and when normal business activity in the Gulf region will resume. It is not the best time to give benefits.

This is part of the reason why statistically superior performance may not reach the rest of the economy—and even the pockets of ordinary workers. At least for now.

When the peace deal is finally signed and the crisis resolved, businesses around the world – not just in Singapore – will tally up their unexpected costs and decide how much they can contribute to their workers.

If economic growth, even if driven largely by the AI ​​boom, continues, Singaporeans can expect a boost in their income. But that can only happen in the second half of the year.

• Read other articles we have written on Singapore current affairs here.

Featured image: tupungato / depositphotos