THE GROUND PICTURE

Singapore is navigating a period of intense structural transition while managing immediate external cost shocks. The Middle East conflict is directly hitting the local cost stack, pushing up electricity contract prices by up to 11 percent and driving diesel prices above 95-octane petrol. Local merchants are warning that food cost increases could eventually surpass pandemic levels due to disrupted supply chains.

At the same time, the labour market is undergoing a state-directed overhaul. The government is rolling out Jobs Transformation Maps across almost every major sector to prepare for technological disruption. Layoffs are rising, but the Ministry of Manpower attributes this to ongoing business restructuring rather than broad-based displacement by artificial intelligence.

The reality on the ground is a squeeze. The cost of living is heavier, and staying employable requires constant adaptation to new technological baselines.

ECONOMY AND COST OF LIVING

The cost stack for living in Singapore is getting heavier, driven largely by external geopolitical pressures. The ongoing war in the Middle East is disrupting global supply chains and energy markets, landing directly on local consumers. Electricity retailers are raising prices to hedge against these costs. Fuel prices are climbing, prompting long queues at cheaper petrol stations and forcing private bus operators to struggle for survival. This energy shock is spilling over into food prices, compounded by expected price hikes for feed and fertilisers in neighbouring Malaysia.

Housing and transport costs remain elevated. The Housing and Development Board is building flats above 40 storeys, such as the 60-storey Pearl’s Hill project, to maximize scarce land. Private home sales dipped early in the year, but prices are projected to rise slightly as new supply enters the market. On the roads, Certificate of Entitlement premiums continue to climb, and a drop in the Preferential Additional Registration Fee rebate is impacting car owners.

While core inflation unexpectedly dipped to 1 percent in January, the lived experience is one of tightening margins. The government has stated it is prepared to step in to help businesses and households if the Middle East conflict worsens.

External energy shocks are raising the baseline cost of living across food, transport, and utilities.

EMPLOYMENT AND INDUSTRY

The job market is expanding overall, but the nature of the work is shifting rapidly. There is strong hiring demand for engineers and technology specialists, with newly created roles accounting for nearly half of all job vacancies in 2025. However, retrenchments increased in the fourth quarter. The Ministry of Manpower notes that these layoffs reflect ongoing corporate restructuring rather than immediate, broad-based displacement by artificial intelligence.

Global technology and finance firms are adjusting their local footprints. Companies like HSBC are considering significant global job cuts driven by AI integration, while Deliveroo has exited the Singapore market entirely. Conversely, the government is actively trying to attract top-tier global talent by launching an AI and technology visa track with a $30,000 monthly income requirement.

For local professionals, the pressure to adapt is high. Workers report anxiety over increased workloads, performance improvement plans, and the integration of generative AI into daily tasks. Slang and informal digital language are also seeping into professional and academic environments, prompting pushback from educators and employers.

Employment growth is concentrated in new technology roles while traditional positions face restructuring and redesign.

GOVERNMENT DIRECTION

The state is directing significant capital and policy attention toward artificial intelligence adoption and workforce reskilling. Budget 2026 introduced enhanced initiatives to support workers in an AI-driven economy. The Infocomm Media Development Authority is launching bootcamps to help business leaders move beyond AI pilots into practical scaling. The Monetary Authority of Singapore has rolled out an AI risk toolkit for financial institutions.

Workforce Singapore is heavily promoting the Career Conversion Programme and the Capability Transfer Programme to reskill mid-career workers and transfer global expertise to the local workforce. The government is publishing Jobs Transformation Maps across sectors from accounting to logistics, explicitly detailing which roles will be displaced and which require upskilling.

Beyond technology, the state is preparing for a super-aged society. The Ministry of Health is increasing MediSave withdrawal limits for chronic conditions and subsidising genetic testing. The government is also enforcing stricter social policies, such as banning the transport of workers in caged lorries by 2027 and imposing heavier penalties for vaping.

The government is aggressively engineering the workforce and regulatory environment to integrate AI while managing the demographic realities of an ageing population.

REGIONAL POSITION

Singapore’s immediate neighbourhood is becoming more integrated but also more competitive. The upcoming Johor-Singapore Special Economic Zone and the completion of the Rapid Transit System Link by the end of 2026 will tighten economic ties with Malaysia. These infrastructure projects promise five-minute border crossings, which will alter talent flows and retail habits. Meanwhile, the Malaysian Ringgit has reached its strongest level against the Singapore dollar since 2021, slightly shifting the cross-border purchasing dynamic.

Regional neighbours are aggressively building their own technological and industrial capacities. Indonesia and Malaysia are stepping up efforts to become regional data centre hubs, though Malaysia is implementing a strategic throttle on non-AI data centres to manage power grids. Vietnam is accelerating its electric vehicle shift and green energy transition with Japanese funding.

As global firms pivot their supply chains, Southeast Asia is absorbing new investments. This forces Singapore to continuously upgrade its infrastructure and connectivity to maintain its hub status.

Deepening physical integration with Johor is occurring alongside rising regional competition for digital infrastructure and green energy investments.

GLOBAL FORCES LANDING LOCALLY

The war in the Middle East is the most immediate global force altering material conditions in Singapore. The threat to the Strait of Hormuz and disruptions in the Red Sea are forcing shipping companies to implement fuel surcharges and airlines to reroute flights. This translates directly into higher freight costs, increased war insurance premiums, and elevated local electricity prices. Singapore is prioritizing its energy stockpile and preparing to intervene if the conflict worsens.

Simultaneously, the US-China trade war is reshaping corporate footprints in the city-state. As the United States threatens new global tariffs and restricts AI chip exports, multinational firms are adjusting their strategies. Some companies are pivoting from shedding Chinese assets to maximizing their Chinese operations, while Chinese firms are increasingly considering local listings in Singapore to hedge against geopolitical risks. This friction cements Singapore’s role as a neutral staging ground, drawing both capital and talent seeking stability amid superpower competition.

WHAT TO WATCH

Whether the government will reverse its stance on withholding public funds for the maintenance and repair of ageing private condominiums.

How the final regulatory and tax terms of the Johor-Singapore Special Economic Zone will impact local business relocation and cross-border hiring.

Whether the current wave of corporate restructuring transitions into permanent job displacement as generative AI tools are fully integrated into enterprise workflows.

How the government balances the rollout of higher Electronic Road Pricing rates against the ongoing spike in global fuel prices.


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