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Overview

Singapore is a remarkable model of economic development. From independence in 1965, it has achieved almost uninterrupted growth of at least 8% per annum for over three decades. By the 1990s, Singapore had GDP per capital levels similar to many OECD countries, and it was acknowledged as one of Asia's "tigers".

Centralized decision-making and planning have been key to Singapore's development. The government has targeted particular industries for development (often
over a long time frame) by putting in place world-class infrastructure and offering generous tax concessions. It has also established Government Linked Companies (GLCs) - like Keppel Corporation, Semb Corp Industries and Singapore Airlines - with the intention that they become home-grown champions in strategic areas of the economy.

Singapore's economy relies on manufacturing, financial and business services, and commerce. Within the manufacturing sector, the dominant industry is electronics (electronics accounts over 30% of manufacturing output, and 60% of non-oil domestic exports), and Singapore is a manufacturing base for several of the world's leading electronics multinationals. Singapore also serves as a hub for South East Asia across an extensive range of financial and business services. In 1997, the government announced its intention to establish Singapore as the pre-eminent financial hub for the wider region and it has introduced significant measures to liberalize financial services. Singapore's historic role as an entrepot and trans-shipment centre also continues to this day. Both its port and airport are world class, regularly winning industry awards and offering superior connectivity for shipping and the airlines.

Until recently, Singapore had experienced few periods of economic difficulty. But it was hit hard in 2001 by a downturn in its key global markets and a collapse in demand for electronics goods. As a result, Singapore experienced in 2001 its worst recession since independence: GDP fell 2.4% after growing almost 10% in 2000, and exports fell by almost 15%. Although its economy grew again by 2.2% in 2002 (largely as a result of increased exports from the biosciences sector), Singapore was hit hard again earlier this year by SARS (Severe Acute Respiratory Syndrome). The Singapore government handled the outbreak better than most, but the economic fallout was significant, particularly in the retail, tourism and consumer-services sectors (at its worst, visitor arrivals fell by more than half, retail sales plummeted by more than 80%, and many leading hotels had occupancy rates of less than 20%).

However, Singapore's economy remains fundamentally strong and there are signs that its economy is recovering again, albeit slowly. The Singapore government expects that, barring any further adverse external shocks, GDP will grow in 2003 by between 0% and 1.0%. Nevertheless, Singapore does still face a challenge in adapting its centralized economic system. The government has recognized that many of the established policies need to be changed, and has embarked on a process of creative destruction. This involves an intensification of measures to liberalize and deregulate the economy, and the active promotion of entrepreneurship.

Top 10 Singapore trade partners in 2001

Ranking Country Imports (US$ mil) % Share
1 Malaysia 20,094 17.3
2 USA 19,159 16.5
3 Japan 16,091 13.9
4 China 7,195 6.2
5 Thailand 5,159 4.4
6 Saudi Arabia 4,229 3.6
7 Germany 3,835 3.3
8 Korea 3,823 3.3
9 Hong Kong 2,785 2.4
10 Philippines 2,555 2.2

Ranking Country Exports (US$ mil) % Share
1 Malaysia 21,122 17.4
2 USA 18,755 15.4
3 Hong Kong 10,820 8.9
4 Japan 9,341 7.7
5 China 5,329 4.4
6 Thailand 5,304 4.4
7 Korea 4,688 3.9
8 Germany 4,297 3.5
9 Netherlands 4,035 3.3
10 Philippines 3,085 2.5

Standard of living

The standard of living in Singapore is high. Local infrastructure is world-class, property owning almost universal and foreign holidays the norm. Per capita GDP at purchasing power parity is over US$27,000, about the same level as in Sweden and the USA.


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