How Economic Growth Impact Businesses in Singapore
Strong first quarter growth in Singapore driven by improved global demand has led private-sector economists to predict that it is set to grow at a much faster pace for the rest of this year.
From January till March this year, Singapore’s gross domestic product (GDP) expanded by 2.5 per cent compared to the same period a year ago. This is higher than the median forecast of 2.4 per cent in an earlier poll
According to Prime Minister Lee Hsien Loong, global growth is looking up and this makes him “cautiously optimistic” about the Singapore economy this year.
The global economy took a turn for the better towards the end of 2016, which boosted Singapore’s exports. Latest surveys revealed that economists were expecting non-oil domestic exports to grow 6.1 percent this year, higher than the 0.3 percent that they projected in the previous survey in December.
Last year’s productivity levels had improved and there was one per cent productivity growth in 2016, much higher than in 2013, 2014 and 2015 when it was nearly zero.
For the first three months of 2017, the manufacturing sector contracted 6.6 per cent on a quarter-on-quarter seasonally adjusted annual basis, from the 39.8 per cent surge in the previous quarter.
The construction sector continued to under-perform – shrinking 1.1 per cent year-on-year in the first quarter, while the services producing industries grew 1.5 per cent on a year-on-year basis in the first quarter, improving from growth of 1.0 per cent in the previous quarter.
Although growth is uneven in all sectors, overall, Singapore’s economy are improving and the challenge is to continue to innovate and raising productivity levels. The government would also do its best to create new jobs by bringing in new businesses and investments, as well as expanding existing businesses.
Strong Emerging Economy
Singapore’s winning formula for the last 50 years as there needs to be a business-friendly environment in place with new jobs that will entice people to come here. The Economic Development Board has been working hard on this front by attracting multinational firms to invest in Singapore.
According to the Monetary Authority of Singapore (MAS), the trade-related sectors, especially those associated with information technology will drive Singapore’s economic growth in 2017. The revival of the global economy should continue to support Singapore’s trade-related sectors, said MAS.
With its strong emerging economy, overall, Singapore certainly looks like a great place to invest. In fact, according to the International Monetary Fund (IMF), Singapore was the third wealthiest country in the world (after Luxembourg and Qatar) in terms of economic output per head.
Another major draw for investors is that it is situated smack in the middle of the world’s busiest shipping lanes, right next to the vital trading channel, the Straits of Malacca. Also, Singapore is actively embracing the latest technologies and implementing them in the financial domain.
A lot is being done by the government, represented by the MAS to create new business opportunities and enhance the welfare of the citizens through numerous programmes.
Attracting Foreign Investors
The immigration policies in Singapore also plays a great deal in attracting foreign investors as it has an impressive pool of talent, with Singapore being noted as a country with “the most internationalised” workforce in the world.
This has determined many companies to relocate here and take advantage of the labour force which is also one of the cheapest in the region.
Singapore has also numerous times been nominated as the easiest city to do business in, while the city’s infrastructure, banking system and communication facilities are also very important as they are less time and money consuming factors when deciding to set up a company.
Apart from the strong economy, Singapore also provides many incentives for foreign investors putting money in certain industries such as financial services, tourism, healthcare and telecommunications.
Foreign investors can also enjoy Singapore’s double tax treaties with over 70 countries that allow them to reduce tax burdens.
Taking into account all the factors mentioned above, it becomes obvious why Singapore is referred to as the global financial hub for entrepreneurs to do business in and remains one of the brightest prospects for investments.
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