by Samantha Chiew
Several supports for growth: resilient household demand, an early-year fiscal tailwind, easier monetary conditions and a continuation of the AI-related investment boom.
The unemployment rate has edged up from still-low levels, hiring appetite appears cautious and the quality of labour-market data, has become less reliable.
Outside of AI, business investment may remain hesitant even with incentives designed to accelerate capital spending decisions, suggesting an uneven capex picture.
I still do not see the conditions for inflation to come back to 2%.
Sustained deficits combined with central bank support, complicate the disinflation path and keep markets sensitive to incoming inflation and labour data.
For 2026, he highlights a mix of supportive “what could go right” factors: easing global financial conditions amid synchronised rate cuts, a banking system characterised by strong capital ratios and relatively low delinquencies and inflation trends that have remained contained despite tariffs.
AI planned investment are US$500 billion from hyperscalers alone and the knock-on cycle in electricity generation and transmission.
Expects higher volatility to accompany elevated multiples and large AI investments whose long-term payoff paths remain uncertain.
Source: Business Times
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