Nomura Lifts Singapore's 2027 Growth View to 4% as AI Demand Broadens Beyond Chips
Source: Singapore Business Review
Singapore's economy is on track to grow faster than anyone expected at the start of the year, and the AI investment wave is the reason. Nomura lifted its 2026 growth call to 5.7% this week — above the government's own revised range — and pushed its 2027 outlook to 4%, up from a previous 3% projection, citing...
Singapore's economy is on track to grow faster than anyone expected at the start of the year, and the AI investment wave is the reason. Nomura lifted its 2026 growth call to 5.7% this week — above the government's own revised range — and pushed its 2027 outlook to 4%, up from a previous 3% projection, citing an AI boom that shows no sign of cooling.
The upgrade follows the Ministry of Trade and Industry's substantial revision of its 2026 forecast to a 4.5%-5.5% range, from 2%-4% earlier, after second-quarter GDP was revised up to 5.9% year-on-year from an advance estimate of 5.7%. Manufacturing, the sector most exposed to AI demand, was revised up to 12.5% growth in Q2 — sharply above the 7.3% recorded in Q1 — as demand for AI-related chips and equipment broadened beyond data centre construction into electronics production.
MTI said the global AI investment boom had hit Singapore harder than expected, while the impact of the Iran war on the economy was less severe than initially feared. Nomura echoed that read, pointing to the global tech upcycle and broadening AI demand lifting electronics output, supported by new capacity such as Micron's S$9.5 billion high-bandwidth memory plant, with trade-related services, financial services and construction all expected to stay buoyant through 2027.
The revision also sharpens the inflation picture. Nomura kept its 2026 core inflation forecast at an average of 2.1% but expects it to climb towards 3% by August or September from 1.6% in June, driven by elevated energy prices and July's electricity tariff hike. With the output gap turning more positive, the bank sees the MAS staying vigilant about second-round effects from tariff and energy adjustments.
Why it matters for Singapore: This is the first major bank to formally extend the AI-driven upgrade into 2027, signalling that the current growth cycle is not a one-year blip tied to a single capex wave. For Singapore businesses, it means sustained demand for AI infrastructure, chips and digital services — and a longer runway for the skills and talent investments the government has been pushing. The flip side is inflation: faster growth on AI's back gives the MAS less room to ease, a trade-off worth watching as the year progresses.
