Singapore’s Economy – Most Open Economy in the World
Singapore’s economy has always had a strong reputation and robust growth over the years, contributing to the nation’s global status as a thriving business hub.
A free-market economy which is highly developed, Singapore’s economy is ranked as the most open economy in the world. Being the 3rd least corrupted country in the world, Singapore is renowned for its low corporate tax rates, pro-business environment and the 3rd highest per-capita GDP in the world. The country’s success is a direct reflection of its outward-oriented strategy for development.
The trade to GDP ratio of Singapore’s economy is the highest worldwide. Being highly dependent on exports, especially chemical and electronic exports means that Singapore’s economy relies heavily on entrepot trade, although the country’s composition of exports has experienced change over the years, transitioning from labour-intense goods to high-value-added products.
Singapore benefits greatly from the inward flow of Foreign Direct Investment (FDI) received from institutions and global investors, thanks in large part to the country’s attractive investment climate. Government-linked companies play an especially vital role in Singapore’s economy.
What Drives Singapore’s Economy?
In 2018, Singapore’s economy experienced an overall growth of 3.2%, mainly driven by value-added manufacturing, electronics and precision engineering sectors. As of 2018, the GDP of Singapore’s economy at the current market price is S$487,088 million. The services industry generated 70% of the nominal GDP, while 25% came from goods-producing industries. Electronics, services and chemicals as the main source of revenue for the country. Among the most important contributors to the services sector include financial, banking, retail and transportation services, while manufacturing accounts for almost a quarter of the country’s total GDP.
However, the Government is forecasting that Singapore’s economy is expected to experience a moderate growth in 2019, ranging from 1.5% to 3.6%.
Making the Most of Its Strategic Location
Despite its small size, Singapore has not let that slow it down as far as the economy is concerned, making the most of its strategic location. With 190-kilometres of the coastline, the country sits on the most important shipping routes in Southeast Asia, which explains why trade and commerce are key drivers of the economy.
Logistics, trade and shipping have become essential to the Singapore economy. In fact, the Port of Singapore is among the busiest cargo ports in the world, helping the nation flourish in import and export trade, especially between Hong Kong, South Korea, Japan, Indonesia, China, Malaysia and even the United States.
Looking Towards the Future
Singapore’s pro-trade business environment have created a favourable economic environment, cementing the island state’s reputation as an efficient place for business investment. Growth may be uneven in certain sectors, but overall, Singapore’s economy continues to improve, and the country’s immigration policies play a big role in attracting foreign investment. Along with the foreign incentives in place, highly developed infrastructures, banking system and communication facilities, Singapore continues to remain one of the best places in the world to do business.