• Singapore:
• Economy

Singapore - Economy

Overview: Singapore originally built its prosperity as an entrepot and as an importer of its neighbours’ raw materials for processing. At independence in 1965, there was a basic electrical assembly industry and some oil refining. During the 1960s these two sectors took off rapidly. There was a huge expansion of oil refining, and in 1967, attracted by tax incentives, Texas Instruments set up a semiconductor plant. Other electronics companies soon followed, and Singapore swiftly became a world player in the electronics industry. Pharmaceuticals subsequently developed, then financial services and tourism stimulated the economy generally.

Singapore has a high level of government intervention, a strong currency, relatively low inflation and a track record of outstanding growth. GDP grew by 6.7% p.a. 1980–90. Substantial inward investment has stimulated rapid economic development and in the 1990s outward investment increased. Since the latter 1990s policy has aimed to increase the innovative, research and development aspects of electronics, biotechnology and other high-tech sectors, so that Singapore would become a centre where new ideas are born rather than one for executing them through skilled and efficient manufacturing.

In the wake of the Asian economic crisis investment and exports (but also imports) were depressed and growth fell sharply from 8.6% in 1997 to –0.9% in 1998, but recovered sharply in 1999–2000, when there was continued heavy investment in new infrastructure. The stock market was liberalised and banking restrictions were eased to allow more competition from foreign institutions. But the economy plunged into recession in 2001 – shrinking by 2.3% – as a result of a slump in the global information technology sector. Despite this setback, the country bounced back quickly and then achieved vigorous growth for the period 2004–2006 with real GDP averaging over 7% annually.

Trade: Manufactured exports (including re-exports) account for 85% of total merchandise exports (2003). Main exports are electronics (including computer and other office equipment, radio and TV components), oil and refined products, pharmaceuticals, chemicals and manufactured products. Imports comprise a wide range of industrial raw materials, machinery and equipment, oil, manufactured goods and food. Chief trading partners, both for imports and exports, are Malaysia, the USA, China, Japan, Taiwan, Thailand, Germany and Saudi Arabia.