Energy shock ripples through the economy
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The energy shock from the Iran conflict is expected to have a ripple effect on Singapore's economy, with various industries facing higher costs and potential supply disruptions. The Monetary Authority of Singapore has raised its inflation forecasts and tightened monetary policy in response to soaring oil and natural gas prices.
The Iran conflict has triggered an energy shock that will impact Singapore's economy. The bunkering industry, a key sector for the city-state as the world's largest refuelling port, is already feeling the effects. The Monetary Authority of Singapore (MAS) has raised its inflation forecasts for 2026 to 1.5-2.5% and tightened monetary policy to allow for a stronger currency. Sectors heavily dependent on energy supplies, including petroleum, gas, and transportation services, will be directly affected, with potential production volume impacts and higher production costs. The labour market may also suffer from slower hiring and pay growth, while the wider economy faces risks of higher inflation and weaker growth. The disruption to supplies and maritime trade routes could result in a near-term negative impact on the Singapore economy.
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