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Singapore
Country Information
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Country:
Singapore
Capital:
Singapore
Currency:
Singapore Dollar

Population: 4,987,600
Government Type: Parliamentary Republic
Riedel Research Coverage by Region

Background

Singapore, officially the Republic of Singapore, is an island city-state located at the southern tip of the Malay Peninsula. Singapore is a microstate and the smallest nation in Southeast Asia. It is substantially larger than Monaco and Vatican City, the only other surviving sovereign city-states. Before European settlement, the island now known as Singapore was the site of a Malay fishing village at the mouth of the Singapore River. Several hundred indigenous Orang Laut people also lived along the nearby coast, rivers and on smaller islands. In 1819, the British East India Company, led by Sir Stamford Raffles, established a trading post on the island, which was used as a port along the spice route.Singapore became one of the most important commercial and military centres of the British Empire, and the hub of British power in Southeast Asia. During the Second World War, the British colony was occupied by the Japanese after the Battle of Singapore, which Winston Churchill called "Britain's greatest defeat". Singapore reverted to British rule in 1945, immediately after the war. Eighteen years later, in 1963, the city, having achieved independence from Britain, merged with Malaya, Sabah, and Sarawak to form Malaysia. However, Singapore's merger proved unsuccessful, and, less than two years later, it seceded from the federation and became an independent republic within the Commonwealth of Nations on 9 August 1965. Singapore was admitted to the United Nations on 21 September of that year. Since independence, Singapore's standard of living has risen dramatically. Foreign direct investment and a state-led drive to industrialization based on plans drawn up by the Dutch economist Albert Winsemius have created a modern economy focused on industry, education and urban planning. Singapore is the 5th wealthiest country in the world in terms of GDP (PPP) per capita. As of January 2009, Singapore's official reserves stand at US$170.3 billion. In 2009, the Economist Intelligence Unit ranked Singapore the tenth most expensive city in the world in which to live—the third in Asia, after Tokyo and Osaka. The population of Singapore including non-residents is approximately 4.99 million. Singapore is highly cosmopolitan and diverse with Chinese people forming an ethnic majority with large populations of Malay, Indian and other people. English, Malay, Tamil, and Chinese are the official languages. Singapore is a parliamentary republic, and the Constitution of Singapore establishes representative democracy as the nation's political system.The People's Action Party (PAP) dominates the political process and has won control of Parliament in every election since self-government in 1959.

Economy

Singapore has a highly developed market-based economy, which has historically revolved around extended entrepôt trade. Along with Hong Kong, South Korea and Taiwan, Singapore is one of the Four Asian Tigers. The economy depends heavily on exports and refining imported goods, especially in manufacturing. Manufacturing constituted 26% of Singapore's GDP in 2005.The manufacturing industry is well-diversified with significant electronics, petroleum refining, chemicals, mechanical engineering and biomedical sciences manufacturing sectors. Singapore has one of the busiest ports in the world and is the world's fourth largest foreign exchange trading centre after London, New York City and Tokyo.

Singapore has been rated as the most business-friendly economy in the world, with thousands of foreign expatriates working in multi-national corporations. Singapore is also considered to be one of the top centres of finance in the world. In addition to this, the city-state also employs tens of thousands of foreign blue-collared workers from around the world.

Forward-looking economic indicators have continued to improve in many countries owing to aggressive fiscal and monetary stimulus. This has led us to revise up our global GDP forecast in recent months. We now expect the world economy at purchasing power parity exchange rates to grow by 3.2% in 2010, following an estimated contraction of 1.3% in 2009. The US economy is forecast to grow by 2.4% in 2010, and this will have a positive effect on Singapore's external sector, as the US is an important direct and indirect export market for Singapore-based firms.

There is a risk that global economic growth may slow in 2011 as the impact of the stimulatory measures that have been implemented dissipates, although we currently forecast growth of 3.4% in that year. We expect international prices for crude oil (dated Brent Blend) to average US$74/barrel in 2010 and US$70/b in 2011, compared with an estimated US$62/b in 2009. Global prices for dynamic random access memory (DRAM) chips and microprocessors will rise in 2010-11, to the benefit of Singaporean exporters of such goods.

In the light of the latest economic data, which show a strengthening in manufacturing industry (driven primarily by the pharmaceuticals sector), we now expect the economy to contract by a relatively modest 2.7% in 2009, compared with our previous estimate that GDP would decline by 4.5% this year. In addition to the forecast steady improvement in the global economy, the fiscal and monetary measures adopted by the government have set the stage for a rebound in economic activity.

But the recovery in the domestic economy will not be rapid, with growth forecast to average 4% a year in 2010-11. Government consumption and investment will continue to make a positive contribution to growth. The government is likely to spend heavily on big investment schemes, and will resurrect large construction projects that it has put on hold. However, the main drivers of growth in 2010 are expected to be a rebound in private consumption and gross fixed investment, although the increase in the latter is expected to be spurred by government investment. Exports will be supported by stronger global economic growth, but there will be no return to the rates of export growth that prevailed before the start of the current global financial and economic difficulties, as demand is expected to recover only gradually in Singapore's main export markets.

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Source: Source: Riedel Research, CIA - The World Factbook, Economist Intelligence Unit