Singapore's growth set to slow but non-electronics exports poised for gains

News analysis

- Ovais Subhani Senior Business Correspondent

After two years of stellar growth, Singapore's economy may be expected to lose some steam in 2026. But that is unlikely to stop businesses here from increasing spending on their expansion and hiring plans.

The Ministry of Trade and Industry last week projected that gross domestic product (GDP) will grow within a range of 1 per cent to 3 per cent, after an expansion of around 4 per cent in 2025 and 4.4 per cent in 2024.

Most analysts agree that the economy cannot continue to grow above its longer-term potential growth rate estimated at 2.5 per cent to 3 per cent.

The electronics sector especially semiconductors, which led growth in 2025 - will remain strong on the back of the boom in global artificial intelligence spending.

However, as the world economy starts to emerge from the whirlwind of US tariffs, most analysts believe Singapore's other growth engine - non-electronics exports will also start to hum more steadily.

Unlike the electronics sector, which has an outsized impact on growth and exports but a smaller share of the labour market, the non-electronics sector with a high concentration of small and medium-sized enterprises represents the bulk of Singapore's workforce.

While the electronics sector is exempt from US tariffs so far, Singapore's non-electronics sector - including machinery, petrochemicals and food preparations faces the 10 per cent baseline tariff. Other significant non-electronics exports are optical, photo and technical products, and medical apparatus.

Across the rest of Asia, the suffering was worse. The US weighted average tariff rate for the region rose from 5 per cent in 2024 to a high of 44 per cent in April 2025.