Budget 2026: Singapore to move forward with confidence despite ‘profound global change’, says PM Wong
Decades of capability building and industry transformation have strengthened Singapore’s economic foundations
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[SINGAPORE] Despite widespread expectations that the US “Liberation Day” tariffs would trigger a sharp global slowdown last year, the worst fears did not materialise, as the global economy proved more resilient than anticipated.
“This year, however, we may not be so fortunate,” said Finance Minister Lawrence Wong, who is also prime minister, in opening his Budget statement on Thursday (Feb 12). He noted that this is also the first Budget of the new term of government, delivered at a time of profound global change.
PM Wong said that for nearly eight decades, the world benefited from an international order that supported stability and economic cooperation.
“The system rested, in large part, on the leadership of the United States,” he said, noting that the country underwrote global security, championed open markets, and helped form the institutions and rules that enabled shared prosperity across the world, including in Asia.
“That era has now come to an end,” he said, adding that the US is re-assessing and, in some areas, undoing key elements of the very system it once helped build. “Trade rules that were once promoted are being set aside.”
This has led to a weakening of the multilateral system, where countries everywhere have less confidence that common rules will protect their interests, said PM Wong.
“As a result, more states are resorting to unilateral action, and some are becoming emboldened to do so.” He added that guard rails that once helped manage disputes and tensions are eroding.
“The world is becoming more contested, more fragmented and, ultimately, more dangerous.”
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PM Wong said the events in just the first month of 2026 have already been of “exceptional scale and consequence”, which have increased geopolitical tensions worldwide.
“As pressures build and the margin for error narrows, the resilience of the global system will be tested far more severely.”
There are also clear and growing signs of fragility in the global economy, he said. Rising public debt in many major economies will strain financial stability and weigh on longer-term growth prospects.
Meanwhile, heightened risk-taking in financial markets has pushed up asset valuations, leaving them “vulnerable to abrupt corrections”.
Any such adjustment, he said, would dampen confidence and spill over into real economic activity. “These external developments have a direct bearing on us.”
Moving forward with confidence
Nevertheless, he said some of the positive momentum from 2025 is expected to continue in 2026. Last year brought better-than-expected gross domestic product growth of 5 per cent – which boosted key industry clusters such as electronics and biomedical manufacturing.
Still, he cautioned that the outlook for this year is likely to be more moderate, with growth projected at 2 to 4 per cent, and inflation at 1 to 2 per cent, amid heightened global uncertainties.
“Despite these uncertainties, we can move forward with confidence – confidence grounded in fundamentals,” he said.
This is because Singapore has, over the decades, systematically strengthened its economic foundations by deepening capabilities, investing in its people, and reshaping industries as technologies evolve.
Moreover, he added that Singapore has built a reputation as a reliable and trusted hub which is stable, secure and well-governed.
Businesses and investors have come to value these qualities “more so now than before, precisely because the world has become more fractured and uncertain”.
PM Wong said all these factors give Singapore an important and tangible competitive advantage.
“But past success alone will not carry us forward,” he warned. “We cannot wait for conditions to turn more favourable. Nor can we fall back on strategies designed for a previous era.”
This year’s Budget, he said, is the first step to refresh Singapore’s strategies and strengthen its social compact.
For more of BT’s Budget 2026 coverage, go to bt.sg/budget26
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