Singapore will present a cautious national Budget on February 12, prioritising fiscal discipline after a year in which household support was unusually large, according to economists tracking the city-state. Forecasts from Bank of America, Maybank and DBS point to an overall fiscal surplus in the range of 0.3% to 1% of GDP, reflecting expectations that policymakers will temper one-off transfers in favour of measures with a longer horizon.
Bank of America economists say the Finance Ministry will likely adopt a measured stance because growth conditions look sanguine and demand is expected to outstrip supply in the coming quarters. They contrast the anticipated approach for Budget 2026 with last year’s Budget, which they describe as more "household friendly" amid earlier concerns about the growth outlook.
Timing and context
The Budget will be delivered by Prime Minister and Finance Minister Lawrence Wong at 3:30 p.m. (0730 GMT) on February 12. The timing comes after advance estimates showed Singapore’s economy expanded by a stronger-than-expected 4.8% in 2025, even as the prime minister has cautioned that sustaining that pace into 2026 will be challenging. The Trade Ministry projects growth between 1.0% and 3.0% for 2026.
Monetary policy and inflation forecasts have also shifted. In January, the Monetary Authority of Singapore increased its forecast for both core and headline inflation to a range of 1.0% to 2.0%, up from 0.5% to 1.5% in October. The central bank expects that global AI-led investment, a key driver behind last year’s growth, will continue to support activity in 2026 as demand outpaces supply.
Where fiscal priorities may shift
Economists expect Budget 2026 to place greater emphasis on long-term positioning rather than short-term household relief. Bank of America notes that officials are likely to concentrate on measures that strengthen the nation’s future competitiveness, reflecting a policy preference to build buffers early in the parliamentary term - the current term having begun after the 2025 general election. This timing gives the government scope to reserve fiscal firepower should economic conditions deteriorate later in the term.
Analysts at BMI similarly anticipate a pullback in cash transfers to households after what they call "elevated support" in 2025. That anticipated retrenchment in direct household assistance is broadly consistent with forecasts of a modest fiscal surplus and with the government's requirement to balance the budget over each parliamentary term.
Investment in technology and productivity
With land and labour constraints becoming more binding, including an ageing workforce, policymakers are expected to direct spending and incentives toward technology and innovation. DBS economist Chua Han Teng expects the government to back investments in technology as one route to mitigate these structural limits.
In January, the government published an update to its Economic Strategy Review that called for concentrating national research and development resources on high-value sectors, pursuing emerging technologies in quantum, decarbonisation and space, and supporting leading local firms to scale internationally. As part of that agenda, Singapore has announced an investment of more than S$1 billion in public AI research through 2030.
Maybank economist Chua Hak Bin says the state will likely promote AI adoption and upgrade national technology investments using existing funding mechanisms, and could offer stronger incentives to encourage firms to hire, given concerns about youth labour-market outcomes.
Labour market signals
Preliminary data from the Manpower Ministry show the citizen unemployment rate increased to 3.0% in 2025, up from 2.9% in 2024. Maybank’s Chua highlights this development when pointing to potential policy responses to support hiring, particularly among younger workers where structural unemployment has reached a four-year high.
Corporate tax receipts and multinational activity
Bank of America analysts flag corporate income tax collections as a key variable to watch in the upcoming Budget. They note that such collections have risen by 1 to 4 percentage points of GDP since 2023, despite lingering uncertainty over global tax reforms. The analysts cite large increases in revenue booked by multinational firms operating in Singapore: Nvidia’s annual revenue attributed to Singapore rose tenfold to $23.7 billion in the 12 months ending January 2025 compared with January 2023. They also point to substantial cloud investments by major global tech firms such as Google and Amazon.
Policy trade-offs and outlook
The expected Budget reflects a balancing act - trimming the unusually generous household support provided in 2025 while allocating resources to technology, R&D and other long-term priorities. Economists see the fiscal stance as prudent given the stronger growth outturn for 2025, the upward revision to inflation forecasts, and the elevated corporate tax receipts that provide some fiscal headroom. At the same time, policymakers will be mindful of labour-market trends and the need to maintain flexibility to respond to future shocks.
Investors and market participants will be watching the Budget for signals on the scale of support for AI and tech adoption, the extent of household transfer reductions, and the implications of rising corporate tax collections for fiscal policy over the medium term.