MAS chief says a lengthy boom could lead to inflation, while a pullback in AI investments ‘could sharply weaken global growth’
Singapore’s economic growth should remain firm in the second half of 2026 although a major uncertainty is the sustainability of the AI investment boom, the head of its central bank said on Tuesday.
Monetary Authority of Singapore (MAS) Managing Director Chia Der Jiun, speaking at the release of the central bank’s annual report, said the Middle East conflict also posed risks, but for now global AI-related demand was “likely to continue to provide a meaningful boost” to the city state while other sectors maintain a pace of growth close to trend.
The annual report for the year ending March 2026 was released a day after the MAS tightened its policy settings for a second consecutive meeting, citing inflation risks.
Chia flagged the AI investment boom as “a major uncertainty” given how AI-driven electronics exports now account for more than 70 per cent of Asia’s export growth so far in 2026, up from 46 per cent in 2024.
A lengthy boom could lead to inflation, while a pullback in AI investments “could sharply weaken global growth through a fall in business investment and semiconductor demand and negative wealth effects”, he said.
“Markets will increasingly be looking to commercial revenue growth to justify the financing risks. Revenue growth will in turn depend on early signs of AI productivity gains at the firm level broadening across the economy and a deepening of transformative applications,” Chia said.