Economic and Political Overview

flag Singapore Singapore: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response

 

Economic Outline

Economic Overview

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, Latest data available.

Note : (E) Estimated data

 

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 data available.

 

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

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.

 

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Political Outline

Current Political Leaders
President: Tharman Shanmugaratnam (since 14 September 2023)
Prime Minister: Lee Hsien Loong (since 12 August 2004, reelected 10 July 2020)
Next Election Dates
Presidential: 2029
Parliamentary: 2025
Current Political Context
Even though it won 83 out of 95 seats, the People's Action Party (PAP), which has governed the country since independence in 1965, came out relatively weakened in the July 2020 general election, where it won 61% of the vote, down from 70% in 2015. The biggest opposition group, the Workers' Party, had its best result to date, winning 10 seats. Although he initially promised he would step down from power before he turned 70 in February 2022, Prime Minister Lee Hsien Loong, son of founding statesman Lee Kwan Yew, has eventually said he will not resign until the economic and health crisis is resolved. Presidential elections were held in September 2023: in the non-partisan election, three candidates vied for the position: Tharman Shanmugaratnam, Ng Kok Song, and Tan Kin Lian. Tharman secured a substantial majority, garnering 70.41% of the votes and achieving a historic winning margin. Notably, he became the first non-Chinese candidate directly elected to the presidency. Albeit formally independent, Tharman has strong ties with the People's Action Party, having been a member since 2001 (resigning just before the election took place).
Main Political Parties
Although Singapore is a multi-party nation, the centre-right People's Action Party (PAP) has dominated its legislature since 1959 and continues to hold an overwhelming majority of the single-chamber parliament.

Opposition parties are widely considered to have no real chance of gaining power. Some opposition groups include:
- Singapore Democratic Party (SDP): a liberal democratic party
- Workers' Party of Singapore (WP): centre-left, opposition party with the most seats
- Progress Singapore Party (PSP): centre-right.
Type of State
Singapore is a parliamentary representative democratic republic.
Executive Power
The President of Singapore is the head of State. The role of the President is largely ceremonial. Following legislative elections, the leader of the majority party or the leader of the majority coalition is usually appointed Prime Minister by the President as head of the Government. The Prime Minister enjoys all of the executive powers, which include implementation of the law and running day-to-day affairs.
Legislative Power
The legislature is unicameral in Singapore. The Parliament consists of up to 105 seats: ninety-three are elected by the people while up to 12 Non-constituency Members of Parliament (NCMP) and up to nine Nominated Members of Parliament (NMP) may be appointed. After the 2020 general election, 93 MPs were elected and two NCMPs were appointed (or, in the terms of the Parliamentary Elections Act, declared elected) to Parliament. Parliament controls the action of the government. This depends on the support of parliament, often expressed by a vote of confidence.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
160/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7
Civil Liberties:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Singapour please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: April 2024