Singapore » Introduction

Basic Economic Facts

GDP Composition by Sector

Singapore has a highly developed market-based economy, and is often considered to be a developed nation. It ranks 25th on the Human Development Index which measures standard of living, and second in the Index of Economic Freedom. Although Singapore has one of the highest per capita gross domestic products (GDP) in the world, domestic demand is relatively low due to a small population. 

The economy depends heavily on exports produced from refining imported goods in a form of extended entrepot trade, especially in manufacturing. Manufacturing contributes around 28% to GDP in 2005. The manufacturing industry is today well-diversified with electronics, chemicals, mechanical engineering and biomedical sciences manufacturing. Along with Hong Kong, South Korea and Taiwan, Singapore's fast-paced industrialization earned it a place as one of the four original 'East Asian Tigers'. 

In 2001, a global recession and slump in the technology sector caused the GDP to contract by 2.2%. The Economic Review Committee (ERC), set up in December 2001, recommended several policy changes with a view to revitalising the economy. Singapore has since recovered from the recession, largely due to improvements in the world economy; the Singaporean economy itself grew by 6.4% in 2005. In the longer term the government hopes to establish a new growth path that will be less vulnerable to the external business cycle than the current export-led model, but is unlikely to abandon efforts to establish Singapore as Southeast Asia's financial and high-tech hub. The per capita GDP in 2005 was US$30,228 and the unemployment rate was 2.5% in January 2006. The economy is expected to grow by 5–7% in the year 2006, after a strong growth in the economy in the first quarter of year 2006. The growth was more than 10%. Initially Lee Hsien Loong, who is the current Finance Minister, had announced expectations of 4-6%. 

Singapore introduced a Goods and Services Tax (GST) with an initial rate of 3% on 1 April 1994. This has substantially increased government revenue by $1.6 billion, stabilising the government's finances. The government has used revenue from the GST to reorient the economy around services and value added-goods to reduce dependence on electronics manufacturing.