The year of 2017 has been a year of suspense and drama in terms of economic fluctuations for Singapore’s economy. The previous year witnessed the economy still reeling from the cusp of recession, predicted to have an uncertain and mute economic mood beginning its first quarter. Nevertheless, the economy still surpassed expectations as it attained its fastest economic growth in almost half a decade.
In his New Year Message entitled “A Strong Foundation for the Future”, Prime Minister Lee Hsien Loong acknowledged Singapore’s economic growth in 2017. According to the Ministry of Trade and Industry, Singapore’s economy expanded to 3.5%, doubling the initial forecasts of 2% to 3%. In the final quarter of 2017, the economy expanded to 3.1%, higher than the projected 2.6% growth. Robust output expansions in manufacturing, precision engineering and electronics were key growth drivers for the final three months of 2017, despite a slump in transport engineering and biomedical manufacturing. PM Lee Hsien Loong cited other positive economic indicators for the year in review, among which are higher income brackets across the broad for middle and low income earners, increased productivity rates of labor forces and innovative technology for enterprises.
2018 Economy Forecast: Will Singapore Enjoy Continued Economic Growth for the Year Ahead?
The Ministry of Trade and Industry published the 2018 Singapore growth forecast, indicating an expected economic expansion between 1.5% to 3.5%. Ms. Selena Ling, the head of treasury research and strategy of OCBC Bank, concurred with the government forecast of 2% to 4% growth in 2018 and called it doable, owing in part to continued globalisation and growth in the Asia Pacific region, along with a much needed boost from the local manufacturing industry, financial services and tourism-related services sector and a $1.4 billion worth of public sector rail-related contracts signed in 2016. Although construction, marine and offshore engineering sectors may continue to struggle, the success of electronics and domestic IT industries in 2017 is expected to carry over to sustain the momentum in 2018. Chief economist Jeff Ng at the research house Continuum Economics also predicted an economic expansion of up to 2.8 per cent.
In an economic forecast for 2018-2020,Trading Economics Singapore predicted the following GDP (Gross Domestic Product) growth rate for the following quarters of 2018:
Factors that Contribute to Singapore’s Strong Economy
When it began life as an independent city-state in 1965, upon separation from Malaysia, Singapore’s prospects were dismal. At that time, the so called “Little Red Dot” in Asia or the “Monaco of the East”, consisted of a small territory with scarce natural resources. Its population of immigrants also had no clear cultural identity. Its per capita Gross Domestic Product (GDP) was a mere 519 US dollars, roughly 13.5 % that of the United States and 77% that of Hong Kong. The dramatic transformation of the City-State into a regional powerhouse in Asia is attributed to the vision of its founding father and Prime Minister, the late Lee Kuan Yew. To illustrate its growth, its per capita GDP in 2016 has now multiplied to 1.21 times that of Hong Kong and has, reached 92 per cent of the United States’ GDP amounting to 52,960 US dollars or 71,000 Singaporean Dollars.
The bedrock of Singapore’s scalar ascent from Third World to First is no secret. Its continued economic success comes from different factors, among these are:
Strategic Location for Global Maritime Trade
Singapore’s strategic location at the forefront of Malacca Strait strengthened its trading position in the maritime trade industry. Almost 40% of maritime trade passes within its natural harbor, and is considered a global trading hub. Since it is located at the crossroads of international trade routes at the heart of Asia, it enjoys trade flows from the United States, Europe, Middle East, and Australia. Nominee for the United States Ambassador to Singapore, K.T. Macfarland, said that Singapore boasts of a geostrategically important location for trade routes. It owns the world’s largest transshipment port and operates as an economic gateway between East and West to the South China Sea.
Sound Fiscal and Economic Policies in Place
Equipped with business-friendly income tax and corporate tax schemes, pro-business statutes, liberal insurance and banking measures, pragmatic corporate formation requirements, laudable sovereign credit rating and high level of foreign reserves, Singapore has progressed into a renowned financial centre attractive to long term investments and foreign businesses. Further, it has consistently topped the World Economic Forum’s Global Competitiveness Reports and World Bank’s Doing Business Reports. In 2016, World Bank chose Singapore for the tenth consecutive time, among 189 countries, as the best country in the world for Doing Business. It likewise topped the world’s list of ease of doing business in 2017.
The report published by the Committee on Future Economy indicated how Singapore sustains its progressive economy in a globally competitive world:
Meritocratic and Honest Government
Singapore has been envisioned as a society of equals. Prime Minister Lee Hsien Loong explained that in a meritocratic type of governance, equality of opportunities is maximised and social inequality is curtailed. Meritocracy pertains to a political philosophy with underlying belief that exercise of powers and position advancement are based on academic performance, measured through merit-based systems. To effectively lead a country, only the best and the brightest must be allowed to governed. Besides its meritocracy, Singapore has also earned praised for its corruption-free, stable and honest political system and efficient public service. Leaders are chosen for their competence, honesty and probity and are strictly prohibited from taking advantage of their positions.
Highly Skilled, Competent Multiracial Workforce
Singapore holds the highest proportion of highly skilled labor in Asia. In a report by Mercer and the World Economic Forum on Human Capital, it was discovered that 54% of Singapore’s workforce is highly skilled, higher than that of New Zealand and Australia. Singapore maintains its economy competitive through its multiracial labor force of top-notch local talent and skilled foreign migrant workers. The World Talent Report published in 2015 showed that Singapore also ranks 10th in work force capability.
Company Formation in Singapore: Establishing Your Business in Singapore with Ease
With the economic forecast looking optimistic in 2018, more investors are likely to set up business within the City-State. If you are planning to undergo company formation to take advantage of Singapore’s solid economy and business-conducive atmosphere, contact Corporate Services Singapore. We have a team of accredited and professionally qualified company secretaries, accountants and administrators who can assist you every step of the way. Start your own Singapore company with our trusted and reliable corporate solutions. Get a free quote today!