Singapore upgrades 2026 key exports growth forecast to 14-16% on electronics-led H1 outperformance

[SINGAPORE] Enterprise Singapore (EnterpriseSG) has significantly raised the Republic’s non-oil domestic exports (NODX) forecast for 2026 to a range of 14 to 16 per cent, from 3 to 5 per cent previously.

This upgrade was primarily underpinned by the better-than-expected NODX performance in the first half of the year, the agency said in its quarterly trade review on Tuesday (Aug 11) morning.

It noted that key exports grew by 18.6 per cent on the year in H1, marking the strongest first-half performance since 2010.

“NODX growth is expected to remain supported in H2 2026, though likely to moderate due to high-base effects,” it added.

In the second quarter, key exports growth came in at a stronger-than-expected 27.4 per cent, following the 9.6 per cent expansion in Q1.

The quarter’s performance was led by a record surge in electronics NODX, at 88.1 per cent, building on Q1’s 57.8 per cent.

This was driven by year-on-year increases in shipments of integrated circuits (91.9 per cent), disk media products (182.5 per cent) and PCs (79.8 per cent).

Non-electronics NODX grew by 8 per cent in Q2 after recording a 3.5 per cent contraction in Q1. EnterpriseSG attributed this to specialised machinery (36.2 per cent), pharmaceuticals (62.3 per cent) and measuring instruments (21.2 per cent).

Overall, NODX to Singapore’s top markets expanded in Q2, with Taiwan (90.4 per cent), the US (58.9 per cent) and South Korea (67.1 per cent) being the key drivers.

Total merchandise trade expanded 40.2 per cent in Q2, up from the 25.5 per cent growth in the previous quarter.

Total services trade rose 9.9 per cent in Q2, following the 5.3 per cent increase in Q1.

EnterpriseSG said the economy has remained more resilient than expected, bolstered by sustained AI-related demand and capex spending.

It noted positive near-term sentiments domestically. “A strong double-digit net weighted percentage of firms – particularly in the electronics and precision engineering clusters – expect improved overseas deliveries in Q3 2026, at 49 per cent and 55 per cent, respectively.”

EnterpriseSG also highlighted favourable pricing expectations: A net-weighted 34 per cent of semiconductor firms and 41 per cent of precision engineering firms expect higher average selling prices in Q3.

“Overall, a net-weighted balance of 12 per cent of manufacturing firms maintain a positive business outlook for H2 2026,” it said.

The agency added that downside risks in H2 include the much-prolonged conflict in the Middle East and the higher tariffs imposed by the US.

Still, it anticipates continued NODX growth in H2, supported by AI-related demand, as well as “favourable guidance from major electronics firms and firmer prices of key electronics products”.

Given the strong electronics performance, RHB group chief economist Barnabas Gan and associate research analyst Laalitha Raveenthar maintained their full-year NODX growth projection at 11.5 per cent.

Maybank analyst Brian Lee said: “The global data centre build-out exhibits strong momentum, boosting demand for the electronic components needed to power AI workloads.”

He noted that the top five American hyperscalers plan to boost capex by an estimated 79 per cent in 2026 and 22 per cent in 2027. Chinese tech giants are also “catching up”, with the market’s top six hyperscalers likely to increase capex by 34 per cent this year.

Lee said the NODX upgrade was expected, aligning with Maybank’s 15 per cent forecast set in June, which lies at the official range’s midpoint.

DBS senior economist Chua Han Teng said the US’ investment should continue to support demand for Singapore’s electronics exports.

July’s forward-looking electronics manufacturing purchasing managers’ index and the latest manufacturing business expectations survey point to a positive outlook for the cluster, he noted.