The economic context of Singapore

Economic Indicators

Singapore's economy is characterised by excellent finances and a high degree of openness, with the country being highly dependent on international trade. According to preliminary government data, the economy showed resilience in 2024, growing by around 4.4% (up from 1.8% in 2023), supported by government measures such as household transfers to offset GST hikes and a package to boost retirement savings for citizens over 50. GDP growth was driven by wholesale trade, finance & insurance, and manufacturing, particularly the electronics cluster and machinery segment, boosted by the global electronics cycle. The finance & insurance sector benefited from increased trading activity and strong net fees and commissions. In contrast, retail trade and food & beverage services contracted, partly due to locals spending more on overseas travel (data Ministry of Industry and Trade). Considering the external and domestic economic environment, and barring any downside risks, the Singapore economy is projected to grow by 2.5% over the forecast period (IMF).

In recent years, government expenditure has remained hefty, driven by increased development spending, particularly in areas such as transport infrastructure, healthcare, and the environment. Additionally, support measures were introduced to assist households and businesses in dealing with the challenges posed by high inflation. Nevertheless, the government budget returned to positive territory in 2023 and continued the positive trend last year as the fiscal surplus for FY2024 has been revised to SGD 6.4 billion, or 0.9% of GDP. Operating revenue for FY2024 was revised up by 7.3% to SGD 116.6 billion, marking a 12.7% increase from FY2023. The stronger performance was driven by corporate income tax, which collected SGD 30.9 billion, surpassing the SGD 28 billion estimate (official governmental figures). To support businesses and individuals, rebates of 50% on corporate income tax (capped at SGD 40,000) and 60% on personal income tax (capped at SGD 200) will be provided for the Year of Assessment 2025. The corporate tax rebate mirrors the previous year’s. The Budget also introduced new tax incentives to revitalize the Singapore equity market, including a generous rebate for newly listed companies. Additionally, sector-specific measures for financial services, real estate, and maritime shipping were introduced to enhance Singapore’s competitiveness in these key areas. Although the recorded public debt appears elevated on paper, at 175.2% of GDP in 2024 (IMF), it primarily serves the purpose of establishing a safe domestic asset market. This debt is predominantly comprised of long-term bonds and securities. Furthermore, substantial reserves accumulated from prior fiscal surpluses (ranging from 200-300% of GDP) are available to address infrequent budget deficits when necessary. Meanwhile, inflation moderated in 2024, with core inflation dropping from 4.6% in 2023 to 2-3%, and overall inflation falling from 4.8% to 2.5%. Core inflation is now forecast to average 1–2% in 2025 (official government data).

Although per capita wealth in Singapore is amongst the highest in the region, unemployment has appeared due to structural economic changes (outsourcing of low-skilled work) and the COVID-19 crisis. However, despite ongoing retrenchments, especially in the tech sector, unemployment remained low in 2024 (at 2% in 2024), and real wages grew for median and lower-income workers after 2023 reductions. The country has one of the highest GDP per capita in the world, estimated at USD 148,185 in 2024 by the IMF (PPP). Social challenges include rising income inequality and social discontent caused by overpopulation, high competition for employment and housing, lack of skilled labour, an ageing population, and distrust towards immigration.

Main Sectors of Industry

Singapore's economy is based on electronics, petrochemicals, trade, finance, and business services. The agricultural sector is almost non-existent except for cultivation of orchids, vegetables and fish for aquariums. Its contribution to GDP (close to 0%) and employment (close to 0%) is negligible (World Bank, latest data available), although the country intends to increase food resilience by developing a new aquaculture centre. Approximately one per cent of Singapore's total land area is dedicated to agricultural activities. The agri-food sector primarily focuses on producing eggs, seafood, and vegetables to meet local consumption needs. The industry comprises 150 land-based food farms and 110 sea-based farms. Singapore does not have mineral resources.

Singapore's economy is highly industrialised. The industrial sector represents 22.4% of GDP and employs over 14% of the active population (World Bank). Electronics and petrochemicals dominate the industry, which also includes biomedical sciences, logistics, and transport engineering. Electronics is Singapore's largest manufacturing industry, accounting for around 20% of total output. The electronics sector is known for its production of semiconductors, integrated circuits, and other electronic components. Data from Singapore's Ministry of Industry show that manufacturing sector output registered a 4.3% growth year-on-year in 2024, following a 4.2% contraction in 2023, while the construction sector expanded by 4.5%, extending the 5.8% increase registered one year earlier.

The services sector contributes over 72.4% of GDP and employs more than 86% of the active population (World Bank). It is dominated by trade, business services, transportation, communications and financial services. As a regional commercial hub, the Port of Singapore is one of the most important in the world. It ranks second in the total volume of container transhipment traffic after Hong Kong. According to official governmental figures, in 2024, the wholesale trade sector grew by 5.1%, improving from 0.9% in 2023, driven by strong sales in machinery and chemicals. Retail trade, however, contracted by 0.4%, reversing the previous year’s 2.8% growth, weighed down by weaker non-motor vehicle sales. Transportation & storage expanded by 5.8%, up from 3.5%, supported by increased air and sea cargo activity. The accommodation sector grew by 7.1%, though slower than 2023’s 15.7%, as international visitor arrivals continued to recover. Food & beverage services shrank by 0.9%, a sharp turnaround from 5.6% growth. Information & communications grew by 5.0%, moderating from 11.2%, while finance & insurance accelerated to 6.8%, up from 3.1%. Real estate growth slowed to 0.2%, down from 3.8%, and professional services eased to 1.2% from 3.4%. Administrative & support services saw a modest 0.5% rebound after contracting by 0.2% in 2023, while “other services industries” grew by 3.0%, down from 4.6%.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	0.1	14.4	85.5
Value Added (in % of GDP)	0.0	22.4	72.4
Value Added (Annual % Change)	2.6	-2.9	2.3

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

89,7/100

World Rank:

1

Regional Rank:

1

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:

8.54/10

World Rank:

1/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Sources of General Economic Information

Ministries

Ministry of Finance (MOF)
Ministry of Trade and Industry (MTI)
Ministry of National Development (MND)
Ministry of Manpower (MOM)
Ministry of Home Affairs (MHA)
Singapore Economic Development Board (EDB)

Statistical Office

Department of Statistics

Central Bank

Monetary Authority of Singapore

Stock Exchange

Singapore Exchange

Economic Portals

Economy Watch
The Strait Times Singapore Economy