Singapore: Economic Development And Outlook In Singapore

Last Updated: 19 April 2018
Article by TMF Group

With the richest economy in Southeast Asia, Singapore has staged a positive turnaround over the past year, going from the edge of recession to its fastest pace of growth in almost 50 years (expanding 3.1% in the last three months of 2017).

Economic outlook of Singapore

Singapore economy grew 3.5% in 2017 supported by the 3.1% growth in the fourth quarter from a year earlier, easing from growth of 5.4% in the previous quarter. A continued rise in demand for electronic gadgets, growth in exports and boosted investment spending due to the recent US tax reform have all been contributors. 

While growth is expected to stabilise in 2018, Singapore's key industries and their digitisation and transformation, are likely facilitators of longer term sustainable growth. However, here, a key concern is the job market, which has experienced an upward trend in the long-term unemployment rate for Singaporean and permanent residents in the past two years, despite showing positive signs. The labour market is going through a transition as old industries fade, technologies reduce labour demand and new growth industries such as fintech, creative IT solutions, aerospace, robotics and advanced manufacturing are less labour-intensive.

A potential dampening effect on growth and raise in inflation could be from the expected increase in government expenditure through investments in the economy, on social services and on infrastructure in the coming years. There may also be a tax hike in the Goods & Services tax, potentially from 7% to 8%. But this is where we can provide value through our extensive accounting and tax knowledge – helping you stay compliant and reduce the risk of penalties or liability.

Regulatory challenges for businesses in Singapore

From a financial perspective, Singapore has become popular as a potential cryptocurrency destination, especially from companies seeking to avoid the regulatory uncertainty in China. The MAS, Singapore's financial regulator and central bank, made it clear that regulations will apply no matter what currency transactions are in.

Environmentally, newer regulations involve more stringent vehicle pollution standards and mandatory air suction waste systems to curb emissions and revive the nation's stagnant domestic recycling rates.

Political stability in Singapore

The People's Action Party, who are currently in power, have been so since 1959. There is a planned leadership change before the election in 2021, as the current prime minister, Lee Hsien Loong, will step down, however, this is anticipated to be smooth and politically stable.

Singapore is a racially and religiously diverse society, dominated by ethnic Chinese and authorities have been focussed on fostering harmony. In a positive outcome, Singapore's first female president, Halimah Yacob, a member of the Muslim Malay minority, was elected in 2017.

Regions and Sectors

Singapore's two key industries are manufacturing and services, which are helping to reverse economic fortunes this year. The growth comes from an explosion in semiconductor manufacturing combined with the service sector's (which is two-thirds of the economy), key trends of financial services and tourism-related services. New growth industries such as fintech, robotics, creative IT solutions, aerospace and advanced manufacturing are also playing their part.  TMF Group's in-depth knowledge of this country is vital to your expansion plans.


After three years of falling prices in the property market, 2018 is anticipated to be a positive year, with several large land deals breaking the property market out of its prolonged slump. There are still an anticipated S$3.3bn (£1.8bn) of land deals set to be completed by the end of the year, pushing the annual total to S$14bn, the highest since 2011, according to Cushman & Wakefield Inc. TMF Group have extensive experience in administering multi-country real estate investment structures, with local specialists on the ground, plus the support of a global network of professionals.

Office rents last quarter rose for the first time in two and a half years and home prices plateaued after a four-year slide. Warehouse supply hit a record level in 2017 as most major logistics developments were completed. There is still an occupancy lag, but it is anticipated that Singapore's growth will rebalance this.

Singapore's Start-Up Environment

Startup Genome's top start-up ecosystem rankings of 2017, has Singapore dropping from 10th to 12th, but ranked first when it comes to talent, unseating Silicon Valley. The government has had an active role in creating a start-up friendly environment as referenced by The Wall Street Journal: "Singapore is pulling out all the stops to build its own version of Silicon Valley as it attempts to create a start-up hub for Southeast Asia."

A Google and Temasek Holdings report predicted that the market size for the ecommerce industry in Singapore will grow an enormous amount to US$5.4bn (£3.85bn) by 2025. An example trend is in payment methods, where Singapore leads regionally, influenced by its status as one of the top cashless societies globally. It's such a big growth industry that there is talk in the government of implementing an ecommerce tax.

TMF Group

Whether you want to set up in Singapore or just want to streamline your Singapore operations we have the local knowledge to help. Talk to us today.

Learn more about TMF Group in Singapore.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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