Criticizing Overreliance on AI: Risks of Geopolitical Shocks and Inflation Linger

While the MAS's upbeat outlook is understandable, it may underestimate the risks that external shocks still pose to Singapore's economy. Relying heavily on the AI boom to offset oil price spikes and US tariffs is a gamble. The AI sector itself is vulnerable to global demand shifts, export controls, and a potential bubble. The Iran conflict could escalate further, driving oil prices much higher and pushing inflation well beyond current forecasts. New US tariffs are not limited to a few sectors; they could broaden and hit Singapore's trade-dependent economy harder than anticipated. Moreover, the MAS's assessment that inflation has risen more than growth has slowed does not fully capture the pain for small businesses and lower-income households facing higher living costs. The central bank may be too optimistic about the resilience of the AI boom, which is still concentrated in specific segments and may not create enough jobs to offset losses elsewhere. A more cautious stance, with contingency plans for further shocks, would be prudent. The public should watch for signs of overconfidence that could leave policymakers unprepared if conditions worsen.