DBS Group Research expects Singapore’s final 2Q26 GDP to be revised up to 5.9% year-on-year and 1.3% quarter-on-quarter on a seasonally adjusted basis, compared with the advance estimates of 5.7% and 1.1% respectively. The revision is attributed to a stronger manufacturing outcome than first reported, alongside a possible upward adjustment to services growth following firmer trade-related services activity and a pickup in re-exports in June.
With 1H26 growth running above trend, DBS Group Research anticipates a higher probability that the government will lift its official 2026 GDP growth forecast to 4.0–5.0% from 2.0–4.0%. The update would come alongside continued reference to uncertainty and downside risks to the outlook.
Implications For Currency And Equity Derivatives
With Singapore’s final second-quarter GDP expected to be revised up to a robust 5.9% year-on-year, we believe derivative traders should position for a stronger Singapore Dollar. Given this upward revision from the initial 5.7% estimate, the Monetary Authority of Singapore is highly likely to keep its tight monetary policy to let the currency appreciate. We suggest buying short-term SGD call options or going long on SGD futures, as historical data shows the currency typically strengthens against the US dollar during periods of upward GDP revisions.
The surge in manufacturing and trade-related services also signals that Singapore’s equity derivatives are highly attractive right now. We recommend taking long positions on Straits Times Index (STI) futures or purchasing call options on the MSCI Singapore Index. Recent trade statistics, including a strong pickup in re-exports and a stabilization in non-oil domestic exports, suggest this manufacturing momentum will carry through the rest of the quarter.
Interest Rate Outlook And Risk Management Strategies
In the interest rate derivative market, we advise positioning for Singapore Overnight Rate Average (SORA) rates to remain resilient. While major global central banks have been cutting interest rates, Singapore’s above-trend growth means local swap rates will likely stay elevated for longer. Traders can exploit this divergence by entering paid-fixed positions in short-end SORA interest rate swaps.
Despite the bullish outlook, we must actively hedge against the global downside risks and uncertainties still flagged for the second half of the year. If the government officially raises its full-year GDP forecast to 4.0–5.0%, any sudden shift in global demand could still spark market volatility. We suggest using protective put options on equity positions to manage risk as the final official growth figures are released in the coming weeks.
