Singapore Business Sentiment Rebounds to 53.3 in Q2, With AI Investment a Key Driver
Source: The Business Times
Singapore business sentiment rebounded two points to 53.3 in the second quarter, with the Singapore Business Federation explicitly crediting AI investment, resilient domestic growth and a contained Middle East fallout for the turnaround. The survey of more than 500 firms found broad-based improvement in profitability and hiring expectations, even as IT-related hiring cooled.
Singapore's business community entered the middle of the year with noticeably better spirits. After the first-quarter dip triggered by energy-driven price shocks and Middle East tension, sentiment ticked up two points to 53.3 on the Singapore Business Federation's Business Sentiment Index for April to June — and a big part of the turnaround is being attributed to artificial intelligence investment. It is the kind of rebound that signals AI is no longer just a headline theme but a measurable force in how local firms read the economic outlook.
The SBF's National Business Survey, drawing on responses from more than 500 businesses, found the recovery was broad-based. Profitability expectations rose 5.1 points to 52.6, and the proportion of firms bracing for a weaker economy over the next 12 months fell to 32 per cent from 41 per cent. Banking, insurance and health services were the most optimistic sectors, and cost expectations eased to 71.2 as the initial price shock from the Gulf conflict moderated. Hiring sentiment inched up to 56.3, though IT-related hiring plans have declined for two straight quarters.
The AI thread runs through the positive read. SBF explicitly cited artificial intelligence investment, alongside resilient domestic growth and a contained Middle East fallout, as supporting the rebound. That aligns with the wider picture shaping Singapore's 2026 economy — Q2 GDP growth came in at a better-than-expected 5.9 per cent, and the AI boom has repeatedly prompted economists to raise their full-year forecasts. The federation's chief executive, Kok Ping Soon, framed the task ahead in terms of competitiveness and innovation rather than simply weathering external risk.
Still, SBF cautioned that the reading denotes neutral sentiment overall, not exuberance. Energy prices and uncertainty around US trade policy could limit further optimism, and satisfaction with current conditions actually dipped. The data also carries a nuance worth watching: while AI investment is fuelling confidence, IT-related hiring sentiment has cooled for two consecutive quarters — a reminder that enthusiasm for the technology does not automatically translate into broad tech-sector hiring.
Why it matters for Singapore: For readers tracking the local AI landscape, this survey is useful confirmation that AI spending is now a first-order driver of Singapore's business mood, not a side note. It also draws a line between macro optimism and sector-level reality — banks and insurers are leaning into automation, while the IT services cohort stays cautious on headcount. As AI's share of Singapore's growth story expands, indicators like the SBF index will increasingly double as a proxy for how deeply the technology has embedded into the broader economy.
