SINGAPORE: Singapore’s gross home product (GDP) progress is anticipated to stay robust this 12 months, however some Singaporean staff on the bottom could not really feel like they’re benefiting from this progress.
In accordance with economists, this may very well be as a result of Singapore’s economic system is exhibiting indicators of a “Ok-shaped progress”, the place AI and technology-related industries are rising quicker and pulling forward whereas non-tech-related industries lag behind.
Maybank Securities Singapore economist Brian Lee instructed Channel Information Asia that whereas headline progress has been robust, “it’s fairly uneven beneath”.
Earlier this month, the Ministry of Commerce and Trade (MTI) raised Singapore’s 2026 progress forecast to 4.5% to five.5%, citing “better-than-expected efficiency” within the first half of the 12 months and a brighter outlook for the remainder of the 12 months.
A lot of the optimism has been pushed by the robust efficiency of the manufacturing, wholesale commerce and finance and insurance coverage sectors within the second quarter. Specifically, “sturdy world AI-related demand boosted progress” within the electronics and precision engineering clusters of producing, in addition to the equipment, gear and provides section of wholesale commerce, the ministry mentioned.
Nonetheless, it’s a distinct story for the home and consumer-facing elements of the economic system, Mr Lee defined.
Retail and meals and beverage (F&B) sectors grapple with excessive rental and labour prices, whereas cautious client spending and a robust Singapore greenback are encouraging extra Singaporeans to spend abroad.
ANZ Asia analysis head Mr Khoon Goh added that the Ok-shaped progress is most evident in Singapore’s exports, with digital non-oil home exports leaping 112% year-on-year (YoY) in July whereas non-electronics exports fell 2.3% over the identical interval.
He additionally famous how manufacturing and logistics drove virtually 60% of progress within the first half of 2026, whereas F&B contracted 0.7% and retail and non-professional providers grew extra modestly.
This can be a concern as a result of the sectors driving essentially the most progress aren’t people who make use of essentially the most staff. Mr Goh famous that sectors similar to retail, hospitality and non-financial providers make up simply 24% of the economic system however make use of round half of the workforce.
Therefore, Mr Goh mentioned, there’s a “feeling on the bottom” that robust headline GDP progress isn’t benefitting staff, particularly as AI disrupts the labour market, forcing companies to restructure to remain related.
The divergence may turn out to be an even bigger concern if weak spot in consumer-facing sectors begins affecting employment and wages, as these sectors make use of extra staff than a few of these driving GDP progress, he added.
Nonetheless, Customary Chartered economists Edward Lee and Jonathan Koh mentioned they might be cautious about calling Singapore’s financial progress “Ok-shaped”, describing it as “robust however comparatively slim and uneven” as a substitute.
Additionally they famous that households expertise the economic system primarily via job safety, wages and buying energy, slightly than the mixture GDP determine.
Sturdy trade-related progress has but to translate into comparable employment positive factors, suggesting the present external-sector upturn has been comparatively “job-light” to this point, they added. /TISG
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