| 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.