Singapore’s economy is expected to rebound strongly in 2021


Singapore is a high-income country with a reputation for sound financial management and transparency. Singapore is renowned for being one of the most dynamic economies in the world, as well as one of the most business-friendly cultures. Regrettably, the Covid-19 pandemic has had a significant impact on the economy, which is heavily reliant on international trade. Singapore’s gross domestic product (GDP) is expected to rise by 6% in 2020. However, the International Monetary Fund (IMF) forecasts a quick rebound in 2021, with a growth rate of 5%, and predicts that the economy will stabilize in 2022, with a GDP growth rate of 2.6 percent.

Economy Overview

Over decades of industrialization, Singapore has transformed itself from a weak domestic market economy with high unemployment and poverty levels to a highly industrialized, free-market economy. With a population of 5.7 million people, the city-state is densely populated. English is one of Singapore’s official languages and the most widely spoken, especially in the business sector.

Exports and domestic demand are currently driving GDP expansion. Singapore’s gross domestic product (GDP) decreased from $372 billion in 2019 to $337 billion in 2020. In 2021 and 2022, however, is forecast to rebound to $362 billion and $379 billion, respectively. The GDP per capita of the country is among the best in the region and the world. It fell from $65,000 in 2019 to $58,000 in 2020 but is expected to rebound to $62,000 and $64,000 in the current and following years.

Unemployment still persists, albeit at a much slower pace, thanks to improvements in the economy’s composition, such as the outsourcing of low-skilled workers. Singapore’s unemployment rate was 2.3 percent in 2019, up from 3.0 percent during the pandemic. Analysts predict that unemployment will decline to 2.6 percent and 2.3 percent in the next two years, respectively, but that the rebound will be incomplete.

Currency and Central Bank

The official currency of Singapore is the Singapore dollar (SGD), which is divided into 100 cents. To differentiate itself from other dollar currencies, it is sometimes denoted by the dollar sign ($) or S$. Singapore’s central bank, the Monetary Authority of Singapore, issues banknotes and coins (MAS). As of 2020, based on the economic indicators in the currency market the Singapore dollar is the 13th most traded currency in the world, and it is one of the strongest currencies in the Asia-Pacific region. Apart from being the country’s central bank, the MAS, which is currently led by Tharman Shanmugaratnam, also serves as the country’s financial regulatory body.

Stock Exchanges and Capital Market

The Singapore Exchange (SGX) is the country’s only stock exchange. It is a multi-asset exchange that offers listing, trading, clearing, settlement, depository, and data services, as well as operating stock, fixed income, and derivatives markets. The FTSE Straits Times Index, or STI, is the SGX’s benchmark index. The STI is a capitalization-weighted stock market index that follows the top 30 companies listed on the Singapore Exchange.

Around 40% of the firms listed on the SGX are headquartered outside of Singapore, and it markets itself as an offshore exchange for stock index futures, serving major Asian economies with the most liquidity.

Bond Market

Both domestic and international buyers continue to flock to Singapore’s bond market. The country is one of the few in Asia with a AAA credit ranking from major rating agencies, making it one of the most established economies in the region. With the current pandemic, risk-averse investors can find more attractive yields in Singapore government bonds. Ten-year Singapore government bonds have a coupon of 0.9 percent, compared to 0.6 percent for US Treasuries.

The country’s local currency bond market reached $380.4 billion in the fourth quarter of 2020, up 3.9 percent quarter-on-quarter and 11.6 percent year-on-year. Furthermore, outstanding government and corporate bonds increased by 5.3 percent and 1.3 percent, respectively, quarter over quarter.



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