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Economic and political overview

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 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 Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 501.43530.71561.73587.67614.15
GDP (Constant Prices, Annual % Change) 1.12.62.52.52.5
GDP per Capita (USD) 84,73489,37093,95697,632101,264
General Government Balance (in % of GDP) 0.80.20.20.20.2
General Government Gross Debt (in % of GDP) 174.8175.2175.8176.5177.2
Inflation Rate (%) 4.82.62.22.02.0
Unemployment Rate (% of the Labour Force) 1.91.91.91.91.9
Current Account (billions USD) 99.1394.2399.43102.3898.26
Current Account (in % of GDP) 19.817.817.717.416.0

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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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.

 
Monetary Indicators 20162017201820192020
Singapore Dollar (SGD) - Average Annual Exchange Rate For 1 USD 1.381.381.351.401.38

Source: World Bank - Latest available data.

 

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Foreign Trade

Singapore's trade represents 311% of its GDP (World Bank, latest data available), one of the highest shares in the world. Main exports in 2023 included electronic integrated circuits (22% - as Singapore is a global leader in the production of semiconductors and integrated circuits), petroleum oils (12% - the country is a major refining centre, processing crude oil from various sources and exporting refined petroleum products such as gasoline, diesel, and jet fuel), machines and apparatus of a kind used for the manufacture of semiconductors (4.5%), turbojets, turbo propellers, and other gas turbines (3.7%), and telephone sets (3.5%). As the country is also a re-export base, imports were led by similar categories: electronic integrated circuits and parts thereof (20.8%), petroleum oils (19.1%), turbojets, turbopropellers, and other gas turbines (5.1%), and telephone sets (3.2% - data Comtrade). For the year, non-oil domestic exports fell by 13.1%, reversing the 3% growth in 2022, with declines in both electronics (-19.7%) and non-electronics (-11.1%). Oil domestic exports dropped by 14.2%, a sharp contrast to the 52.4% surge in 2022, mainly due to lower oil prices, though export volumes rose by 2.3%, building on a 1.7% increase the year before (data Ministry of Trade & Industry).

The main export destinations include China (13.8% of all exports in 20223), Hong Kong (10.6%), the United States (9.5%), Malaysia (9.4%), and Indonesia (7.4%), while most imports arrive from China (13.9%), the United States (12.3%), Malaysia (11.3%), South Korea (6.1%), and Japan (5% - data Comtrade). Singapore’s strategy focuses on promoting exports while reducing import barriers. It joined the RCEP, the world’s largest trade deal, covering 30% of the global economy. The agreement includes ASEAN and its FTA partners, addressing trade in goods, services, investment, and cooperation, along with rules on e-commerce, IP, procurement, competition, and SMEs.

The country has a structural trade surplus. According to WTO data, in 2023, exports of goods amounted to USD 476.2 billion and imports reached USD 423.4 billion (-7.6% amid lower energy prices and -10.9% y-o-y, respectively). With regard to services, Singapore’s exports reached USD 328 billion (-2.5% y-o-y), against USD 295.5 billion in imports. The decline in services exports was driven by a 23.9% drop in transport services, partly offset by growth in travel (80.0%), other businesses (2.6%), and financial services (4.7%). The overall trade balance was estimated to be in surplus by 37.4% of GDP by the World Bank (from 38.5% in 2022). According to preliminary estimates from EnterpriseSG, non-oil domestic exports grew 0.2% in 2024, reversing the 13.1% contraction in 2023, driven by an 8.2% rise in electronic exports, led by integrated circuits, disk media, and PCs. Non-electronic NODX fell 1.9%, a smaller decline than the 11.1% drop in 2023, mainly due to lower exports of pharmaceuticals, specialized machinery, and petrochemicals.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 359,266329,830406,226475,578423,448
Exports of Goods (million USD) 390,763362,534457,357515,802476,252
Imports of Services (million USD) 206,508210,642247,003294,949295,498
Exports of Services (million USD) 219,792216,739282,559336,511328,033

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 323.1331.7329.8333.0311.2
Trade Balance (million USD) 96,327103,694121,741150,514154,782
Trade Balance (Including Service) (million USD) 111,298109,808157,305192,076187,333
Imports of Goods and Services (Annual % Change) -0.1-1.79.63.31.0
Exports of Goods and Services (Annual % Change) -0.0-0.29.23.02.4
Imports of Goods and Services (in % of GDP) 146.8150.1146.8147.2136.9
Exports of Goods and Services (in % of GDP) 176.3181.6183.0185.8174.3

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 7.65.14.33.54.6
Volume of imports of goods and services (Annual % change) 7.65.84.64.15.9

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Singapore is a member of the following international economic organisations: IMF, Asia-Pacific Economic Cooperation (APEC), ICC, Association of Southeast Asian Nations (ASEAN), Colombo Plan, Common Wealth, G-77, WTO, among others. For the full list of economic and other international organisations in which participates Singapore click here. International organisation membership of Singapore is also outlined here.
Free Trade Agreements
Singapore is a member of Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020. The complete and up-to-date list of Free Trade Agreements signed by Singapore can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
China 13.8%
Hong Kong SAR, China 10.6%
United States 9.5%
Malaysia 9.4%
Indonesia 7.4%
See More Countries 49.4%
Main Suppliers
(% of Imports)		 2023
China 13.9%
United States 12.3%
Malaysia 11.3%
South Korea 6.1%
Japan 5.0%
See More Countries 51.4%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: THARMAN Shanmugaratnam (since 14 September 2023)
Prime Minister: Minister Lawrence WONG (since 15 May 2024)
Next Election Dates
Presidential: 2029
Parliamentary: 23 November 2025
Current Political Context
The People’s Action Party (PAP), which has ruled the country since it gained independence in 1965, remains a dominant ruling party in Singapore’s politics. A disruption to the succession plan occurred after the announcement in 2021 by Deputy Prime Minister Heng Swee Keat to step down as leader of the fourth-generation PAP team: Prime Minister (PM) Lee Hsien Loong had planned in 2020 to step aside two years later, but the pandemic delayed his departure. Prior to elevating him to deputy prime minister, PM Lee appointed Finance Minister Lawrence Wong as the new leader in 2021. After two decades as Singapore’s Prime Minister, 72-year-old Lee Hsien Loong stepped down in May 2024. In a seamless and well-orchestrated transition, Lawrence Wong has been sworn in as the country’s fourth leader since independence in 1965. The immediate focus of the fourth-generation leadership team is to secure a mandate in the next general election, which will be held by November 2025 in what is likely to be a more volatile global economic environment. In fact, Singapore may be severely impacted by widespread U.S. tariff impositions and indications of slowing development in China due to its status as a key maritime and logistics hub. The conviction of a serving minister since 1986 for accepting personal gifts while in public office is one example that the People's Action Party has frequently used to showcase its governance record. However, previous election outcomes demonstrate that voters' decisions can be significantly influenced by current socioeconomic concerns.
Main Political Parties
Although Singapore is a multi-party nation, the centre-right Parti d'action populaire (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:
- Workers' Party of Singapore (WP): centre-left, opposition party with the most seats
- Progress Singapore Party (PSP): centre-right
- Singapore Democratic Party (SDP): a liberal-democratic party.
Executive Power
The President of Singapore is the Head of State, and the role is largely ceremonial, though the President retains some discretionary powers in areas such as financial reserves and key public service appointments. After legislative elections, the President appoints the leader of the majority party or coalition as Prime Minister, who serves as the head of Government. The Prime Minister, along with the Cabinet, holds executive powers, including implementing laws and overseeing the day-to-day administration of the country.
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. While Parliament technically oversees the actions of the government and expresses its support through mechanisms like votes of confidence, the dominant-party system means the ruling People's Action Party (PAP) typically has strong control over legislative processes.
 

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