Singapore flag Singapore: Economic and Political Overview

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 data, after growing by 3.6% in 2022, Singapore's economy expanded by 1.2% last year, managing to steer clear of a recession despite the global economic slowdown attributed to elevated interest rates. Singapore's aviation and tourism-related sectors also saw positive outcomes due to a rebound in visitor arrivals. On the other hand, the export-oriented manufacturing sector, especially the electronics industry, encountered reduced demand from significant trading partners, although it started to register growth in the final quarter. The Ministry of Trade and Industry anticipates Singapore's growth for 2024 to fall within the range of 1% to 3%, foreseeing a potential recovery in semiconductors and other export sectors (+2.1% according to the IMF forecast).

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, at 0.7% of GDP (from -1.3% one year earlier – IMF). In 2024, a one-percentage-point rise in the Goods and Services Tax (from 8% to 9%) and accelerated economic growth are projected to contribute to an increase in tax receipts. Although the recorded public debt appears elevated on paper, at 167.9% of GDP in 2023, it primarily serves the purpose of establishing a domestic safe 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 remained elevated in 2023, at 5.5%, but is expected to follow a downward trend over the forecast horizon (3.5% this year and 2.5% in 2025) amid a tight fiscal policy.

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, the labour market continued to expand for the ninth straight quarter at the end of 2023, with increases for both residents and non-residents. The country has one of the highest GDP per capita in the world, estimated at USD 133,108 in 2023 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 Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 466.79497.35520.97547.32573.15
GDP (Constant Prices, Annual % Change) 3.61.02.12.52.5
GDP per Capita (USD) 82,80887,88491,72895,92399,984
General Government Balance (in % of GDP) -1.30.70.30.80.3
General Government Gross Debt (in % of GDP) 167.5167.9168.3168.8169.3
Inflation Rate (%) n/a5.53.52.52.0
Unemployment Rate (% of the Labour Force) 2.11.81.81.81.8
Current Account (billions USD) 90.2482.5679.2079.9280.03
Current Account (in % of GDP) 19.316.615.214.614.0

Source: IMF – World Economic Outlook Database, October 2021

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, 2023), 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 24.9% of GDP and employs over 15% of the active population (World Bank, 2023). 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 Economic Development Board show that manufacturing sector output registered a strong rebound of 7.4% year-over-year in October 2023, after 12 consecutive months of y-o-y contraction.

The services sector contributes over 70.9% of GDP and employs more than 85% of the active population (World Bank, 2023). 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. The growth in transport and storage, health and social services sectors did not compensate for the decline in the recreation and personal services, and the education services. According to Statistics Singapore (2023), the services sector generated a total of SGD 4,441 billion in operating revenue in 2021, representing an increase of 33.4% over the previous year.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 0.3 14.4 85.3
Value Added (in % of GDP) 0.0 24.2 70.9
Value Added (Annual % Change) -7.7 2.9 4.6

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

 

Find more information about your business sector on our service Market reports.

 
 

Find out all the exchange rates daily on our service International currency converter.

 

Indicator of Economic Freedom

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:

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

 

Country Risk

See the country risk analysis provided by Coface.
 

Return to top

 

Return to top

Any Comment About This Content? Report It to Us.

 

© eexpand, All Rights Reserved.
Latest Update: February 2024

Return to top