Economic trends
The Singapore economy was particularly affected by the international financial crisis because of its extreme financialization and high degree of openness, and thus its dependence on international trade. While GDP growth rate was above 7.5% before the financial crisis, it fell sharply in 2009 (-0.8%), before reaching the exceptional degree of 14.5 % of the GDP in the following year, boosted by the regional recovery, strong growth in exports and a strong recovery in domestic demand. Due to supply disruption caused by the Japanese earthquake of March 2011 and the decline in global demand later that year, economic growth in Singapore has again deteriorated. The latest estimates indicate a growth of around 5% for 2011. The uncertainty of a possible crisis of sovereign debt in the eurozone, the continuing difficulties of the U.S. labor market and the U.S. policy of fiscal consolidation make the prospects for 2012 hardly optimistic. The growth rate of Singapore could be between 1 and 3% and the key trade-related areas may experience turbulence.
In the context of a volatile and uncertain external environment, priority is given to supporting economic growth and controlling inflation. To deal with rising property prices and curb demand, the government has introduced a new tax on real estate purchases. After achieving a budget surplus in 2010-2011, the government is now able to introduce tax incentives and relax its monetary policy. Mid-term objectives are the promotion of innovation and productivity gains. To maintain its competitive position despite rising wages, the government seeks to promote activities with high added value (biotechnology, research and development and pharmaceuticals) in the manufacturing and service sectors.
The level of per capita wealth in Singapore is amongst the highest in the region. After a long period of full employment, unemployment has appeared, especially due to structural economic chances (outsourcing of low-skilled work) and worsened during the crisis. However, it has since decreased and now remains at around 2% of the active population.
Main branches of industry
Singapore's economy is highly industrialized. The biggest sector is the manufacturing sector, followed by the wholesale and retail sector, business services, transport and communication and financial services. The electronics and petrochemical industries are dominant. The services sector contributes almost three quarters of the GDP and employs three quarters of the active population. The industrial sector represents a quarter of the GDP. The primary sector is almost nonexistent (except for the cultivation of orchids, vegetables and fish for aquariums). Singapore does not have any mineral resources.
Singapore is a regional trading hub. The Port of Singapore is amongst the world's biggest and is the second traffic center for container transshipment, behind Hong Kong.
International trade
A real warehouse and crossroads of international trade, Singapore is highly dependent on external trade, which represents more than 400% of the GDP. The strategy adopted by the country is to promote export while being careful to minimize barriers to imports. Singapore has signed the Asian Free Trade Area agreements (AFTA in the ASEAN context) and several bilateral agreements.
Singapore imports machinery and equipment, mineral fuels, chemical products, food commodities and consumption goods from Malaysia, United States, China, Japan, South Korea, Indonesia and Saudi Arabia. The country exports machinery and equipment (electronic), consumption goods, pharmaceutical products and mineral fuels to Malaysia, Indonesia, Hong Kong, China, the United States, Japan and Australia.
Although the volume of trade diministed in 2011, Singapore shows a large trade surplus, a trend which should continue in the coming years.
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Last updates: January 2012
