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Economic and political overview

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Singapore's economy is characterised by excellent finances and a high degree of openness, with the country being highly dependent on international trade. However, GDP only grew 1.3% in 2019, the worst the slowdown in 10 years at the time, mainly due to the trade war between the US and China and to a cyclical global downturn in the electronic sector. Due to the COVID-19 pandemic, the country registered a negative GDP growth of -5.4% in 2020 before a strong rebound at +7.6% in 2021 and a slow down at 3% in 2021. The latest IMF forecast is expecting a 2.3% rate in 2023 and 2.6% in 2024, subject to the post-pandemic global economic recovery. Growth factors include Singapore business-friendly regulatory system, 184.8% of GDP in exports and domestic demand.

The country's government balance dived to -7.9% of GDP due to the impact of the COVID-19 pandemic on public spending, before a come back to -2.3% in 2021 and -0,5% in 2022. It is expected to remain at -0.5% in 2023 and to come back in positive territory at +0.6% in 2024 (IMF, October 2022). Singapore's gross debt remained high at 159.9% and 141.1% of GDP in 2021 and 2022, and is projected to remain at 140% in 2023 and 139.9% in 2024. While public debt is high, financial assets held by the country more than compensate for it.  Inflation was negative in 2020 (-0.2%) before reaching 2.3% in 2021 and 5.5% in 2022. The IMF is forecasting inflation of 3% in 2023 and 2% in 2024. The Monetary Authority of Singapore is expected to maintain its policy in 2023. Economic challenges include slower exports due to Chinese economic slowdown, the U.S.-China trade war, decreasing global demand for electronics (19.7% of exports), a lagging construction sector, and a tight monetary policy, according to Coface.

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. Singapore’s annual average unemployment rate reached 2.7% in 2021 and 2.1% in 2022, and is expected to remain at 2.1% in 2023 and 2024 (IMF, October 2022). Singapore ranked the best country in the world in human capital development in 2021 (World Bank, 2022). 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.

In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 348.39423.80466.79515.55537.26
GDP (Constant Prices, Annual % Change) -3.98.93.61.52.1
GDP per Capita (USD) 61,27477,71082,80891,10094,595
General Government Balance (in % of GDP) -7.9-1.1-1.30.7-0.4
General Government Gross Debt (in % of GDP) 149.0147.7134.2134.5134.9
Inflation Rate (%) -0.22.36.15.83.5
Unemployment Rate (% of the Labour Force) 3.02.72.12.12.1
Current Account (billions USD) 57.3276.3790.2479.9180.59
Current Account (in % of GDP) 16.518.019.315.515.0

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, 2023), although the country intends to increase food resilience by developing a new aquaculture centre. The sector is registering regular growth rates since 2019. Singapore does not have mineral resources.

Singapore's economy is highly industrialised. The industrial sector represented 24.9% of GDP and employed over 15% of the active population in 2022 (World Bank, 2023). Electronics and petrochemicals dominate the industry, which also includes biomedical sciences, logistics, and transport engineering (GuideMe Singapore).

The services sector contributed over 70% of GDP and employed over 84.1% of the active population in 2022 (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 total volume of container transshipment traffic after Hong Kong. The growth in transport and storage services, health and social services sectors did not compensate the decline in the recreation and personal services, and the education services.

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.  Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 0.0 15.6 84.4
Value Added (in % of GDP) 0.0 24.9 69.4
Value Added (Annual % Change) 10.8 13.3 5.2

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 represented 338% of its GDP in 2022 (World Bank, 2023). The country ranks the 15th importers and the 15th exporters of the world (WTO, 2023). Main exports include electronic integrated circuits and microassemblies, electrical machinery and equipment, mineral fuels followed by chemicals, optical and medical equipment, transportation, business services, travel and financial services. Imports, on the other hand, were led by integrated circuits, refined petroleum, electrical machinery/equipment, turbo-jets and turbo-propellers, business services, transportation, travel, royalties and license fees.The International Monetary Fund (IMF) is forecasting a increase of 4.3% in the volume of exports of goods and services of the country in 2023, after an increase of 6.5% in 2022, and an increase of 5.2%% of its imports, after an increase of 8.4% in 2022.

Main export destinations include China (16% of all exports in 2022), Hong Kong (14%), the United States (9.1%), Malaysia (9.7%) and Indonesia (6.6%), while most imports arrived from China (15%), Malaysia (15%), the United States (11%), Japan (6.1%) and Indonesia (4.3%). The greatest risk to Singapore trade was the U.S. exit from the Trans-Pacific Partnership in January 2017; however, a formal signing ceremony excluding the U.S. was held in March 2018. Trade and exports also fell between 2019 and 2021 due to global trade tension, weakening demand for electronics and the COVID pandemic (The Strait Times). On the 15th of November 2020 Singapore has signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Indo-Pacific countries. This free trade agreement is the largest trade deal in history, covering 30 per cent of the global economy. It includes the Association of Southeast Asian Nations (ASEAN : Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and ASEAN’s free trade agreement partners (Australia, China, India, Japan, New Zealand and Republic of Korea). The RCEP covers goods, services, investment, economic and technical cooperation. It also creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium sized enterprises.

According to WTO data, exports of goods amounted in 2021 to USD 457.35 billion and imports reached USD 406.22 billion. With regard to services, Singapore exported USD 229.55 billion USD worth of services and imported USD 223.35 billion. The strategy adopted by the country is to promote exports while minimizing barriers to imports. Singapore has signed the Asian Free Trade Area agreements (AFTA in the ASEAN context), the Trans-Pacific Partnership (TPP) and several bilateral agreements. All customs duties between Singapore and the E.U. are expected to disappear once the European Union-Singapore Free Trade Agreement is ratified by both countries (The Straits Times).

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 327,923370,881359,266329,830406,226
Exports of Goods (million USD) 373,446412,955390,763362,534457,357
Imports of Services (million USD) 181,256199,891207,966172,480223,580
Exports of Services (million USD) 172,304206,441216,880187,261229,866

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

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 316.4324.3321.8331.7338.3
Trade Balance (million USD) 101,030104,13798,141103,628118,216
Trade Balance (Including Service) (million USD) 90,630108,813107,917109,475124,502
Imports of Goods and Services (Annual % Change) 8.17.20.1-2.37.6
Exports of Goods and Services (Annual % Change) 7.47.60.3-0.26.8
Imports of Goods and Services (in % of GDP) 145.0147.7146.5150.0153.5
Exports of Goods and Services (in % of GDP) 171.4176.6175.3181.7184.8

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) -1.38.75.34.53.9
Volume of imports of goods and services (Annual % change) -1.910.86.25.24.5

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)		 2022
China 12.4%
Hong Kong SAR, China 11.2%
Malaysia 10.0%
United States 8.8%
Indonesia 7.2%
See More Countries 50.3%
Main Suppliers
(% of Imports)		 2022
China 13.2%
Malaysia 12.5%
United States 10.8%
South Korea 6.4%
Japan 5.6%
See More Countries 51.3%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Mrs. Halimah Yacob (since 14 September 2017)
Prime Minister: LEE Hsien Loong (since 12 August 2004, reelected 10 July 2020) - PAP
Next Election Dates
Presidential: 2023
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. The impact of COVID-19 pandemic on the Singapore economy has been broad and significant since 2020, affecting different sectors of the economy to varying degrees. The country has injected an aggregated 73.7 billion USD stimulus into the economy, its biggest in history. Despite social restrictions and border closures, Singapore's economy returned to growth in 2021 and 2022.

The ruling People's Action Party will remain dominant, although the influence of opposition parties on policy will rise. The finance minister, Lawrence Wong, is set to succeed the prime minister, Lee Hsien Loong, in 2025 or 2026, with the next general election serving as a referendum on his popularity.
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 (centre-right)
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.
 

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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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