The economy of Singapore is a highly developed mixed market economy with dirigiste characteristics. Singapore's economy has been consistently ranked as the most open, competitive and pro-business in the world. It is also perceived as the 3rd least corrupt in the world. Singapore has low tax-rates and the highest per-capita GDP in the world in terms of purchasing power parity (PPP). The Asia-Pacific Economic Cooperation (APEC) is headquartered in Singapore.
Alongside the business-friendly reputation for global and local privately held companies and public companies, various national state-owned enterprises play a role in Singapore's economy. The sovereign wealth fund Temasek Holdings holds majority stakes in several of the nation's largest bellwether companies, such as Singapore Airlines, Singtel, ST Engineering and Mediacorp. With regard to foreign direct investment (FDI), the Singaporean economy is a major FDI outflow-financier in the world. In addition, throughout its history, Singapore has benefited from the large inward flows of FDI from global investors, financial institutions and multinational corporations (MNCs) due to its attractive investment climate along with a stable political environment throughout its modern years.
Overview Singapore relies on an extended concept of intermediary trade to entrepôt trade, by purchasing raw goods and refining them for re-export in order to sustain its high levels of export-oriented industrialization, such as in the wafer-fabrication industry and in oil refining. Singapore has a strategic port which makes it more competitive than many of its neighbours in carrying out such entrepôt activities. Singapore's trade-to-GDP ratio is among the highest in the world, as of 2020 the ratio was 320%. The Port of Singapore is the sixth-busiest in the world by cargo tonnage and is the busiest transshipment port in the world.
Singapore is also a regional, continental, and global hub for the management and operations of various MNCs because of its location in proximity of other Asia-Pacific markets, along with its connectivity and infrastructure (including airline hubs, maritime ports, Gigabit fiber-optic communications, road transport and public transport) and its immigration policies in encouraging global talent. In addition, Singapore is an international destination for various types of tourism (Business tourism, MICE (Meetings, Incentives, Conferences, Exhibitions) tourism, Medical tourism, Urban tourism).
Singapore's economy is often referred to as a "miracle" due to its rapid transformation from a developing country to a developed, high-income economy in a relatively short period of time. This transformation took place in the second half of the 20th century under the leadership of Prime Minister Lee Kuan Yew and his government. One of the key factors contributing to Singapore's economic miracle was its strategic location, which made it an ideal hub for international trade and commerce.
The country's main exports include electronics, chemicals and services. Singapore is the regional hub for wealth management. Water is scarce in Singapore and a sizeable percentage of water is imported from Malaysia.
Small and medium-sized enterprises (SMEs) are the backbone of Singapore's economic landscape. In 2022 SMEs contributed 48% (S$284 bil) of Singapore's total enterprise nominal value-added and employed 71% of Singapore's total workforce of 3.63 million.
Singapore has limited arable land, meaning that Singapore is heavily reliant on agrotechnology parks (particularly vertical hydroponic farms) for agricultural production. As a result, Singapore imports 90% of its food supply and has a wide variety of supplier countries in order to achieve its food security; Singapore is ranked as among the most food secure in the world.
Apart from its strategic location at the cross-roads of trade between the East and the West, Singapore has little to no natural resources, hence human resources is a pivotal issue for the health of the Singaporean economy; the services and manufacturing sectors of the economy are heavily reliant on a highly-educated and highly-skilled 'Professional, Managerial, Executive and Technical' (PMET) workforce composed of residents and expatriates. The economy of Singapore ranked 2nd overall in the Scientific American Biotechnology ranking in 2014, with the featuring of Biopolis.
To preserve its international standing and to further its economic prosperity in the 21st century, Singapore has taken measures to promote innovation, to encourage entrepreneurship and to retrain its workforce. The Ministry of Manpower (MoM) has the prime responsibility for setting, adjusting, and enforcing immigration rules for foreign workers, in order to achieve the dual mandate of maximum employment of the local resident population and maximum economic growth for the nation. Approximately 29% of the total population within Singapore are non-resident foreigners, including 255,800 foreign domestic workers (FDWs) who operate in Singapore.
Economic statistics
The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates in 2022–2027). Inflation below 5% is in green. Table of economic data from 1980 to 2021YearGDP (in Bil. US$PPP)GDP per capita (in US$ PPP)GDP (in Bil. US$nominal)GDP per capita (in US$ nominal)GDP growth (real)Inflation rate (in Percent)Unemployment (in Percent)Government debt (in % of GDP)198022.99,479.412.15,005.010.1%8.5%5.8%n/a198127.810,958.814.45,672.110.8%8.2%5.9%n/a198231.611,927.315.96,000.07.1%3.9%6.3%n/a198335.613,281.018.06,717.88.6%1.0%5.6%n/a198440.114,689.919.67,160.38.8%2.6%6.1%n/a198541.115,039.418.66,788.4-0.6%0.5%4.6%n/a198642.515,563.018.86,870.81.3%-1.4%2.0%n/a198748.317,406.221.67,794.710.8%0.5%3.9%n/a198855.619,547.326.69,329.011.3%1.5%2.6%n/a198963.721,730.131.410,725.710.2%2.3%1.8%n/a199072.623,812.938.912,763.39.8%3.5%1.8%73.5%199180.025,528.045.514,502.06.7%3.4%1.8%76.4%199287.327,019.352.116,136.26.6%2.2%1.8%79.0%199399.630,059.360.618,290.111.5%2.3%1.7%71.2%1994113.033,054.673.721,552.411.1%3.1%1.7%70.7%1995123.735,087.087.824,914.97.2%1.7%1.8%69.8%1996135.336,869.696.326,232.97.5%1.4%1.7%71.3%1997149.139,283.1100.126,375.98.3%2.0%1.4%70.8%1998147.537,557.085.721,829.3-2.2%-0.3%2.5%84.6%1999158.139,943.786.321,796.65.7%0.0%2.8%85.3%2000176.343,775.896.123,852.89.0%1.3%2.7%82.3%2001178.443,104.289.821,699.7-1.1%1.0%2.7%94.5%2002188.345,080.292.522,159.83.9%-0.4%3.6%96.3%2003200.748,774.797.623,730.44.5%0.5%4.0%99.1%2004226.654,377.3115.027,608.19.9%1.7%3.4%95.7%2005250.958,815.0127.829,961.37.4%0.5%3.1%92.7%2006281.964,054.4148.633,768.49.0%1.0%2.7%86.5%2007315.768,793.8180.939,432.99.0%2.1%2.1%87.8%2008327.767,718.3193.640,008.61.9%6.6%2.2%97.9%2009330.266,212.2194.238,926.80.1%0.6%3.0%101.7%2010382.775,389.8239.847,236.714.5%2.8%2.2%98.7%2011415.080,052.4279.453,891.56.2%5.2%2.0%103.1%2012436.082,065.0295.155,547.54.4%4.6%2.0%106.7%2013448.183,001.8307.656,967.44.8%2.4%1.9%98.2%2014461.884,423.2314.957,564.83.9%1.0%2.0%97.7%2015481.486,974.7308.055,645.63.0%-0.5%1.9%102.2%2016501.589,436.6318.856,858.53.6%-0.5%2.1%106.6%2017534.995,310.3343.261,149.64.7%0.6%2.2%107.7%2018567.7100,686.1377.066,857.33.7%0.4%2.1%109.4%2019584.2102,431.4375.565,833.21.1%0.6%2.3%128.2%2020566.899,681.2345.360,727.6-4.1%-0.2%3.0%152.0%2021635.3116,486.3397.072,794.97.6%2.3%2.7%159.9%2022701.0131,425.7423.679,426.13.0%5.5%2.1%141.1%2023742.3140,280.1447.284,500.42.3%3.0%2.1%140.0%2024777.8147,117.9470.188,926.02.6%2.0%2.1%139.9%2025811.9152,667.0491.292,363.02.5%1.5%2.1%140.6%2026848.2158,689.4513.596,065.72.5%1.5%2.1%141.2%2027886.1164,987.2536.899,935.12.5%1.5%2.1%141.8%
History
British colonization In 1819, Stamford Raffles, at the time Lieutenant-Governor of Bencoolen, established a trading post in Singapore. Raffles had been searching for a new settlement that could be used as an outpost of the British Empire. He left Calcutta and set out to explore much of South-East Asia. At the time, the Dutch Empire and British Empire were close economic rivals. Colonization enabled these empires to gain control of the vast resources of militarily weaker and economically less prosperous nations. Raffles was looking for a new settlement that could replace Malacca as a key economic advantage over the Dutch Empire. The former had been handed over to the Dutch under the Treaty of Vienna of 1815. Raffles found Singapore to be a perfect location, sitting just off the edge of the Straits of Malacca, nowadays one of the most important shipping lanes in the world. As well, the territory had key economic resources which would benefit the British. There was abundant timber and fresh water, and a natural deep water harbor which would be beneficial for the British fleet. He arrived on an island at the mouth of the Singapore River, where there was a small Malay settlement. At the time accompanied by William Farquhar, Raffles met with Temenggong (essentially, Chief of Security, for the settlement) Abdul Rahman to negotiate the right to establish a trading post on the island, under the British Empire. The island was ruled nominally from Johar on the peninsula by Tengku (essentially, Prince) Rahman, Sultan of Johor, who was heavily influenced by the Dutch and the Bugis. However, the Sultanate was weakened by factional division so that Temenggong Abdul Rahman and his officials were more loyal to Rahman's elder brother Tengku Hussein (or Tengku Long) who was living in exile in "Riau" (likely the Riau Archipelago). With the Temenggong's help, Raffles managed to smuggle Hussein back to Singapore. He offered to recognize Hussein as the rightful Sultan of Johor and provide him with a yearly stipend; in return, Hussein would grant the British the right to establish a trading post on Singapore. On 6 February 1819 Raffles succeeded in having the territory formally incorporated into the British Empire as the aforementioned trading post. Much of the settlement's rapid economic growth thereafter can be credited to its natural suitability as a seaport hub.
Trade expansion On 17 November 1869, the Suez Canal opened, connecting the Mediterranean Sea to the Red Sea. This allowed for a decrease in travel time, which resulted in a rise in trade volume. The nation saw a $32 million rise just a year after its opening.
Trade volume reached $105 million Straits dollars in 1879, during which entrepot trade was the main source of income and trade alone accounted for more than one-third of GDP.
Independence In the 1950s, the region saw social unrest which resulted in colonial powers deciding to relinquish some decision making. With spurs of race riots the colonial powers sought to empower and establish a formidable local government. With most of the unrest resulting from high unemployment, the local government was directed to solve this issue. The Economic Development Board was formed to empower the Singapore government in establishing, developing, and financing industrial undertakings.
In 1955, a Singapore local legislative Assembly with 25 out of 35 members elected was formed.
Upon independence from Malaysia in 1965, Singapore faced a small domestic market, and high levels of unemployment and poverty. 70 percent of Singapore's households lived in badly overcrowded conditions, and a third of its people squatted in slums on the city fringes. Unemployment averaged 14 percent, GDP per capita was US$516, and half of the population was illiterate.
Industrialisation boom and change