•Singapore posted its fastest economic growth in history in 2010, with real GDP expanding by 14.5%.
•Singapore’s manufacturing sector registered a 30% growth in 2010, which was a major contributor of the robust GDP growth.
•In the first three months of 2011, Hong Kong’s total exports to Singapore expanded 24% year-on-year (YoY) to US$1.8 billion, while imports from Singapore rose by 23% YoY to US$8.2 billion.
Current Economic Situation
In 2010 Singapore’s GDP posted its fastest growth rate since records began in the early 1960s, with real GDP expanding by 14.5%. Growth in the first quarter of 2011 was also robust at 8.5% YoY, according to the advance estimates published by the Ministry of Trade and Industry (MTI). On a seasonally adjusted annualised basis, real GDP surged 23.5% quarter on quarter (QoQ), its fastest pace since the second quarter of 2010.
The Singaporean government forecasts economic growth for 2011 to be within a range of 4-6%, slowing down considerably from the hefty pace of the previous year.
The unemployment rate recorded 2.2% (overall) and 3.1% (resident) in 2010, down from 3% (overall) and 4.3% (resident) in 2009. Inflation rose 2.8% in 2010 compared with an increase of 0.6% in 2009.
Singapore’s manufacturing sector, which accounts for some 22% of GDP, recorded a real growth of 29.7% in 2010 and became the major contributor to the robust GDP growth. In the sectoral breakdown, electronics production, which was the largest and accounted for one-third share of the manufacturing activities, gained 35.5% in 2010. Biomedical manufacturing was the second largest sector in manufacturing for the same year.
In the first quarter of 2011, the growth in manufacturing sector slowed to 13.1% YoY. According to the MTI, the slowdown reflected a large contraction in output in the biomedical manufacturing sector due to a switch in the value-mix of products and scheduled plant maintenance shutdowns, which slowed to 15.6% in the first quarter of 2011 from 82.2% in the previous quarter. Similarly, the electronics sector also slowed to 12.1% in the first quarter of 2011 from 14.7% in the previous quarter. Nevertheless, the production of petrochemicals and speciality chemicals posted a stronger growth in the first quarter of 2011, with output growing by 13% YoY to accelerate from 10% YoY in the last quarter of 2010.
The wholesale and retail trade sector, accounting for 16.5% of GDP, posted a YoY growth of 15% in 2010, a significant improvement from the 6% decline in 2009. Nevertheless, retail sales fell 2.5% YoY, compared to a 9.3% decline in 2009. The continued contraction in retail sales mainly reflected a slump in motor vehicles sales, which declined 25% in 2010. Excluding vehicle sales, retail sales posted a positive YoY growth of 5.6% in 2010. Items of telecommunications and computers recorded the fastest growth, gaining 11% YoY in the same period.
The financial services sector grew 12% in 2010, up form 4.3% in 2009. On the other hand, business services also gained 5.9% in the same period, mainly on the back of real estate leasing activities.
Singapore’s services sector contributes more than two-thirds of the country's GDP. In recent years, Singapore has been keen to develop its MICE industry (i.e. Meetings, Incentives, Conventions and Exhibitions) as a growth engine for the country. After the opening of Resort World Sentosa in January 2010 and Marine Bay Sands in April 2010, Singapore’s combined meeting space has been boosted to 200,000 sqm. The new MICE cluster includes two casinos, the Universal Studio theme park, a waterworld amphitheatre, hotels, a spa centre, shopping malls, meeting rooms and ball rooms.
In February 2011, the government announced an S$3.2bn (US$2.5bn) “grow and share” package of cash grants and tax rebates for households for the fiscal year 2011/12 (April-March).
Singapore's exports rose by 30.6% YoY in 2010. Major export items were petroleum & products, machinery & equipment, including integrated circuits, parts of personal computers and diodes & transistors. Major export markets included Taiwan, Hong Kong, South Korea, the Chinese mainland, the EU and the US.
Singapore's imports grew by 26.7% YoY in 2010. Major import items included integrated circuits, parts of personal computers and telecommunications equipment. Major sources of imports included the US, Malaysia, the Chinese mainland, Japan and South Korea.
Singapore’s non-oil exports declined 1.8% year on year (YoY) in April 2011 as exports of electronics goods fell 10% YoY. The exports of electronics goods to Hong Kong and the US dropped 23% YoY and 12% respectively. Excluding the electronics goods, the non-oil exports grew 2.8% YoY.
Free Trade Agreements (FTAs)
Singapore has been active in establishing strategic relationship with its trading partners, typically through concluding FTAs. For example, FTAs have been signed with Japan, Korea, Australia, New Zealand, China, the US, Panama, Peru and India, with ongoing FTA negotiations with countries like Canada, Mexico, Pakistan and Ukraine.
Singapore has also engaged in FTA negotiations under the auspice of ASEAN. The Trade in Goods Agreement of the China-ASEAN Free Trade Area (CAFTA) was implemented in July 2005, followed by the implementation of Trade in Services in July 2007 and the signing of the Investment Agreement in August 2009.
China and Singapore signed the China-Singapore Free Trade Agreement (CSFTA) in October 2008 after two years of negotiations. CSFTA is a comprehensive bilateral FTA with trade-in-goods and trade-in-services elements. Under CSFTA, which took effect from January 2009, more than 85% of Singapore exports to China are granted zero-tariff access. Key exports benefitting from the zero-tariff arrangement include petrochemicals, processed foods, and electronics and electrical products.
Singapore’s network of FTAs has covered 18 bilateral and regional FTAs with 24 trading partners in 2011. These FTAs have eliminated trade barriers so as to facilitate trading between Singapore and other countries.
Singapore adopts a liberal trade policy. Very few goods are dutiable or under control. High tariffs are imposed only on liquor, tobacco, petroleum products and motor vehicles.
The country imposes no quota restrictions. Most goods can be imported freely without licences. However, import licences are required for pharmaceuticals, hazardous chemicals, films and videos, arms and ammunition.
In addition to FTA commitment to eliminate import tariffs, Singapore has also agreed to remove tariffs in phases on goods imported goods from its APEC counterparts.
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