Singapore: Growth forecast lifted as AI tailwinds persist – UOB

FXStreet Insights Team FXStreet

UOB’s Jester Koh raises Singapore’s 2026 GDP growth forecast to 4.8% from 4.0% after strong 1H26 performance, with manufacturing and electronics leading gains on AI-related demand. The note highlights risks from Middle East tensions and potential oil price spikes that could derail the electronics cycle and weigh on growth, but baseline expectations remain for solid expansion.

Forecast upgraded on strong 1H26

"We raise our 2026 GDP growth forecast further to 4.8% (from 4.0% prev, 2027F: 3.0%), following the 1H26 GDP growth outperformance (6.0%). Recent indicators also suggest that AI-related tailwinds could remain supportive through 3Q26."

"This points to continued strength in AI-related demand. In addition, the increase in the electronics orders-to-inventories ratio suggests that firms are drawing down existing inventories to meet robust demand."

"This should support electronics IP growth in the months ahead. We see left-tail risks to our baseline forecast."

"A meaningful re-escalation in the Middle East conflict, leading to a renewed surge in energy and oil prices, could prompt central banks globally to tighten monetary policy further. If accompanied by a selloff in AI-related equities amid stretched valuations, firms may delay or cancel capex plans."

"This could, in turn, lead to an unwinding of the electronics cycle and weigh materially on growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD surrenders some gains, back to 1.1440

EUR/USD now gives away part of the earlier advance and recedes toward thre 1.1440 zone on Tuesday. The pair’s firm uptick comes in response to the marked sell-off in the US Dollar, which has intensified after US inflation figures disappointed expectations in June and investors has assessed Chair Warsh’s testimony.

Gold battles to recover the $4,100 mark

Gold reverses the recent weakness and reclaims the area beyond the key $4,000 mark per troy ounce on Tuesday. The precious metal’s recovery picks up pace and approaches the $4,100 region following the Greenback’s decline and comments from the Fed’s Warsh.

Crypto Today: Bitcoin, Ethereum, XRP extend sideways trading amid ETF outflows, US-Iran war escalation

Bitcoin hovers around $62,500 amid prevalent sideways trading. Meanwhile, major altcoins such as Ethereum and Ripple are holding above crucial support levels at $1,700 and $1.05, respectively, reflecting ongoing consolidation across the crypto sector.

Fed Chair Warsh reaffirms they will deliver price stability

While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.