’s Prime Minister Lawrence Wong unveiled a budget he said will help the city-state thrive as globalization retreats and it faces a “more dangerous” world.
“Standing still is not an option. We cannot wait for conditions to turn more favorable, nor can we fall back on strategies designed for a previous era,” Wong said in his annual budget speech in Parliament.
Wong, who’s also the finance minister, highlighted tax breaks for local firms and global trade deals overseas to adapt to a more unpredictable environment, he said. He also addressed the impact of artificial intelligence, which he said “must serve our national interests and our people.”
Wong has been among the first world leaders who aired caution about the shift away from free trade and the rules-based order amid US President Donald Trump’s return to office — conditions which had allowed Singapore’s small and open economy to thrive for decades.
Singapore will be navigating the uncertainty from a position of strength, with the economy expanding 5 percent last year despite the initial volley of US tariff threats. The government is betting that the momentum can carry over through 2026, with the AI boom lifting manufacturing, exports and services. It raised its growth forecast this year to 2 percent – 4 percent, from the earlier estimate of 1 percent-3 percent.
Wong said Thursday that the government aims for the high end of a 2 percent – 3 percent economic growth range over the next decade.
The ruling People’s Action Party will be under pressure, though, to show that the economy’s gains are both sustainable and equitable, especially after its strong showing in last year’s election.
The AI wave risks worsening job anxiety at a time when more young people are struggling to find work and swathes of roles are at risk of automation. Inflation is also on the rise, which could put living costs back in focus.
While income inequality in Singapore fell to a record low in 2025, the top 20 percent households are still richer than all the other families combined, according to a recent study published by the Ministry of Finance, which Wong helms.
Singapore is also on track to becoming a “super-aged” society this year, where 21 percent of its population are aged 65 and above. Fewer people are also having babies, with total fertility rate staying stubbornly at a historic low of 0.97 in 2024.