Euromonitor reports that Singapore’s economy rebounded robustly from the shock induced during the early stages of the COVID-19 pandemic. Following a contraction of 4.1% in 2020, annual real gross domestic product (GDP) growth came in at 7.6% in 2021, compared to 5.2% for the developed countries average. This was due to a combination of a solid vaccination program with extremely strong uptake, the strength of its economy prior to the pandemic, the government’s timely policy implementation to deal with the negative effects of the pandemic on households and businesses, along with good recovery in the external sector.
Although annual real GDP growth is expected to moderate in the short term, it is forecast at a respectable 3.7% in 2022, versus 2% for the developed countries average that year, but will be negatively affected by supply constraints and the war in Ukraine.
With total goods exports equating to 108% of GDP in 2021, Singapore demonstrates that it has a very open economy. Furthermore, Singapore is very dependent on imports of food and energy, given the small size of its geographical territory that prohibits agriculture, whilst the country has limited natural resources. Total goods imports accounted for 95.3% of GDP in 2021. It’s very open economy and high reliance on imports make Singapore’s external sector extremely vulnerable to global fluctuations in trade, with demand and supply changes considerably affecting the economy.
Singapore is expected to remain one of the wealthiest nations in the world. An advanced technology sector and extensive free trade policies have cemented Singapore’s image as an attractive location for international companies, contributing significantly to the increase in the highest earning class.
The wealthy and affluent consumer segment is forecast to grow continuously in both numbers and net wealth, supported by a favorable tax regime, driving expenditure on ‘inconspicuous consumption’ categories, such as education and health goods and medical services. Additionally, the country will continue to boast one of the highest savings per capita levels globally, which is forecast to continue to rise over the period to 2030. These combined factors will help to support discretionary spending in Singapore.
Singapore has concluded free trade agreements with Australia, Japan, New Zealand and the U.S. and is negotiating free trade agreements with the Gulf States, Canada, Chile, China, India, South Korea, Jordan and Sri Lanka. A recently concluded free trade agreement with the EU is one of the most ambitious commercial accords the EU has ever struck. Singapore is also expected to become an associate member of the Pacific Alliance which presently consists of Colombia, Chile, Mexico and Peru. Finally, the city-state is a member of the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was formally created in March 2018.
At the end of 2020, Singapore became a member of the largest trade bloc in the world, the RCEP, which stands for Regional Comprehensive Economic Partnership. The trade bloc consists of 15 countries from the Asia Pacific and Australasian regions, such as China, Japan, South Korea, Philippines, Thailand and Australia, and aims to promote more active regional trading, thanks to the elimination of tariffs on goods traded within a bloc. The deal is also expected to strengthen intra-regional investment and enhance regional supply chains through harmonization of trade and investment policies and procedures. Trade-dependent Singapore is expected to strongly benefit from the deal, thanks to the country’s large business presence in regional supply chains. Furthermore, regional cooperation is anticipated to support faster trade recovery after the COVID-19 pandemic.
Singapore relies on manufacturing, finance and tourism to provide most of its growth but that leaves it especially vulnerable to downturns in consumer demand in wealthy countries. At the same time, the city-state’s strong competitive position has allowed it to accumulate a huge amount of foreign exchange reserves – amongst the largest in Asia. This buffer offers ample protection in times when the global and regional environment slumps.
The population reached 5.9 million in 2022, (CIA World Factbook Est.), up from 4.3 million in 2000. By 2030, officials expect the population to be 6 million. Singapore’s society is ageing even while the population grows. Median age was 41.8 years in 2022, nearly 8 years greater than in 2000. The number of elderly (those over 65 years) represented 11% of total population in 2021 and the share will rise to 25.3% by 2030.
The proportion of the population aged 65 or over is growing and the youth population is shrinking. Singapore is projected to experience one of the largest percentage point increases in the elderly share of the population at 21% between 2019 and 2050, according to the UN. The working-age population (aged 15-64) will gradually decrease, leaving fewer workers to economically support the elderly population.
USDA’s Office of Agricultural Affairs, OAA, hereinafter referred to as “FAS Singapore” reports that Singapore’s highly import dependent, multi-billion-dollar food industry is driven by robust consumer spending, high disposable incomes, and intense urbanization. The country’s trade and regulatory policies are focused on ensuring consistent foreign supply of high-quality food and agricultural products. Singapore’s total agricultural and related product imports in 2021 reached US$17.2 billion, with the United States capturing a 9% market share.
