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Home | Singapore | Singapore Overview | Economy
Economy

Despite its small domestic market, Singapore’s economy is heavily engaged in the global marketplace. It is ranked as the world’s second most open economy by the Heritage Foundation’s Index of Economic Freedom. It is also one of the most stable in macroeconomic terms with no foreign debt, high government revenue and a consistently positive surplus. During the 1997 Financial Crisis, while most of its neighbouring economies were sliding, Singapore’s remained relatively stable. The country also weathered the 2008 global financial crisis and in fact emerged as one of the world’s fastest growing economies in 2010; a time when the developed economies of US and Europe were still struggling with the aftermath of the crisis. This is despite the fact that Singapore has no natural resources and a very small land area.  The economy is driven by (a) exports in electronics manufacturing and machinery, (b) financial services, (c) tourism, (d) the world’s largest cargo seaport.

KEY INDUSTRIES
The manufacturing sector contributes anywhere between 20-30% to Singapore’s GDP annually. The major industries include electronics (semi-conductors, precision-engineering, etc.), pharmaceutical, chemicals, construction, and ship-building. The manufacturing industry demonstrated resilience in 2011 thanks to the pharmaceutical and bio medical sectors. However, the manufacturing output growth is expected to slowdown in 2012 owing to a dampened demand for electronics from traditional export markets such as the US and Europe. On the other hand, key industries under the services sector such as wholesale and retail, financial and business services, and tourism are expected to witness strong growth.

It is important to highlight Singapore’s financial services industry. Its business-supportive environment and political stability has attracted many multi-national banking and investment firms. In the process, the knowledge, technology and skills that MNCs bring are transferred into the domestic market. You can assume that every major bank and investment firm from the US or Europe operating in Asia would be headquartered in Singapore. Perhaps Singapore’s only direct Asian competitor in the business of “attracting MNCs” is Hong Kong.

Other emerging industries that are making significant contributions to Singapore’s economy include casinos, health-care, education, and infocomm and media.

NATURAL RESOURCES
Located at the southernmost tip of the Malaysian peninsula and with a land area smaller than that of New York’s, Singapore has no significant natural resources. While Singapore operates the third largest oil refinery in the world, the raw materials come from overseas, specifically Saudi Arabia.

It has been said that Singapore’s true natural resource is its people. This factor is an essential reason for the country’s economic success. As the economy grows, foreign and local companies have access to a pool of an educated workforce and eventually, a burgeoning consumer market.

INFRASTRUCTURE
Being a a commercial and military seaport during the colonial era meant Singapore already had a well-developed infrastructure in place. The post-colonial government went on to improve and expand the country’s transport, communications, industrial, and housing systems.

By land, Singapore is served by 3,297 kilometres of paved highways, 138.2 kilometres of rail (mass rapid transit and light rail combined), and island-wide bus and taxi operations.  The transport system is efficient, safe, and punctual.

By air, Changi International Airport is connected to 182 cities in 57 countries. It handles more than 4,000 weekly flights transporting passengers and cargo worldwide. By sea, the Port of Singapore (PSA Corporation) gives shippers a choice of over 200 shipping lines and access to some 600 ports in 123 countries. At any one time, there can be as many as 1,000 ships docked making it the busiest container port in the world.

The telecommunications system is no less remarkable. There are about one-thousand two-hundred twenty-five (1,225) mobile phone subscribers per 1,000 of the population. With the government’s effort to drive internet-usage, 99% of the population is now online. In hotspots such as coffee chains, fast-food restaurants, the stretch of Orchard Road and Changi Airport, you can use a national wifi service called Wireless@SG for free.

Business premises for industrial and commercial operations are readily available for your use. The Jurong Town Corporation (JTC) has over 7,000 hectares of industrial land and 4 million square metres of built industrial space strategically located to suit your business type. For commercial businesses, choice of world-class high-rise and low-rise offices in the Central Business District or other parts of town are available.

GDP
The Singapore economy grew by 4.9% in 2011. According to a Bloomberg report, Singapore’s gross domestic product was S$326.8 billion in 2011, about $260 billion based on average exchange rates or $252 billion based on year-end currency rates. Given that the current economic environment is marked with uncertainty regarding the Euro zone debt crisis and sluggish economic growth in the US, the government expects GDP growth to slow down in Singapore to about 1-3% in 2012. Headline CPI inflation is expected to average between 2.5-3.5% in 2012 owing to higher costs of accommodation and private road transport.

EXPORT AND IMPORT TRADE
Singapore’s main export industries are machinery and equipment, electronics, consumer goods, pharmaceuticals, chemicals, and other mineral fuels. Exports in 2010 totaled $351.18 billion. Singapore’s primary export partners include Hong Kong, Malaysia, US, Indonesia, China, and Japan. In 2010, Singapore’s imports totaled $310.39 billion. The main import industries are machinery and equipment, mineral fuels, chemicals, foodstuffs, and consumer goods. Singapore’s primary import partners include US, Malaysia, China, Japan, Indonesia, and South Korea. Singapore is considered to be the world’s fourteenth largest exporter and fifteenth largest importer.

ON A FINAL NOTE
Singapore’s economy is on a healthy growth path. The country was recently ranked as the third wealthiest nation in the world and the government anticipates sustained investment inflows into the country in 2012 with fixed asset investments expected to reach S$13-S$15 billion.

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