SINGAPORE, May 25 (Xinhua) -- Singapore maintained its 2026 economic growth forecast at 2 percent to 4 percent on Monday, citing stronger-than-expected first-quarter expansion driven by artificial intelligence (AI)-related demand, even as risks from the U.S.-Israel-Iran conflict cloud the global outlook.

This photo taken on Feb. 9, 2026 shows the city skyline of Singapore. (File photo: Xinhua)

The Ministry of Trade and Industry (MTI) said the economy grew 6 percent year-on-year in the first quarter, extending the 5.7 percent expansion recorded in the previous quarter, supported by strong performances in wholesale trade, manufacturing, and finance and insurance.

Robust AI-related demand continued to underpin growth, the ministry said in a statement.

At the same time, higher prices and shortages of crude oil and related products stemming from the Middle East conflict weighed on parts of the economy, contributing to contractions in the fuels and chemicals segment of the wholesale trade sector and the chemicals cluster of the manufacturing sector.

The MTI had raised its 2026 growth forecast in February from 1 percent to 3 percent, to 2 percent to 4 percent, expecting strong momentum from the fourth quarter of 2025 -- fueled largely by the AI investment boom -- to carry into 2026 alongside expansionary fiscal policies in major economies.

Since then, however, the global economic outlook has weakened following the outbreak of the conflict, the ministry said.

Still, "AI-related demand has remained robust and should continue to support the growth of regional economies throughout the year," the MTI added.