Singapore 

Singapore country policy

Policy established 11 July 1999

• No Restrictions
• The country ceiling is 2000 mln euro
• Early warning signal 1500 mln euro
• - of which was used as at 2011-12-31 36 mln euro

Country class: 0

Singapore country facts

Atradius Dutch State Business Economic Research

Date : 28 October 2010 

Country : SINGAPORE 

POLITICAL SITUATION : STABLE

Head of state : President Sellapan Rama Nathan (84 years, since 1999, re-elected in 2005 for 5-years term). PM Lee Hsien Loong.
Form of government : Democratic republic.
Internal political situation : The People’s Action Party (PAP) is in power since Singapore’s independence in 1965 and controls 82 of 84 seats in the parliament. The opposition is weak and divided and has little opportunities to present itself. The PAP is business friendly but personal freedoms are limited for Western standards.
Social situation : The Singapore population consists of ethnic Chinese (77%), (Moslem) Malay (14%) and (Hindu Tamil) Indians (8%). Income distribution is relatively equal, but income disparities tend to increase since several years. Racial tensions (like in Malaysia) are not really present. The risk of an Islamist terrorist attack cannot be excluded (Strait of Malacca may prove an attractive target).   
International relations : Improving relationship with Malaysia.
Member of : UN, ASEAN, AFTA, IMF, WB, WTO, ADB, Commonwealth.

INTERNAL ECONOMIC SITUATION : STRONG RECOVERY
General situation : Singapore is considered one of the Asian Tiger economies. Income per capita and level of development is at OECD standards. Singapore is considered the main transport and financial service hub in the South East Asia region. Its economy is, due to its openness, and dependence on certain specific sectors like electronics and pharmaceuticals, vulnerable.
Business cycle : Singapore went through a recession in 2009. This recession was markedly less severe than initially feared and the 2010 recovery is impressive: 12%. Particularly tourism, merchandise exports and financial services show large growth. 
Inflation : 2.6% forecasted over 2010
Interest rate :    Lending rate at 5.4% per annum but rate rise expected for 2011
Unemployment : Very low at 3% (2009)  
Public sector balance :  Modest deficit of -1.2%
Public expenditures : Excellent fiscal discipline. Despite fiscal stimulus measure the 2010 deficit is only 0.7%.
Stock exchange : The Straits Times has risen from 2900 to 3100 since January. 2009 showed a much bigger rise.  
Banking sector :  In principle healthy banking sector with adequate supervision, however some exposure to US subprime mortgages is not unlikely. The government has recently put through further liberalisation of the sector, allowing more foreign banks to open branches.
Economic policy : Good fiscal discipline.

EXTERNAL ECONOMIC SITUATION : TOURISM & TRADE RECOVER QUICKLY
Main foreign markets : Malaysia (13%), US (9%), EU (14%), China (20%), Japan (8%), Taiwan (5%).
Main sources of foreign exchange : business services, electronics, petroleum products, chemicals, tourism.
Competitive position : Increasing competition from other Asian countries. Singapore has to look for new high value added sectors and diversify away from the (relatively low-skilled) electronics sector.

Balance of payments  
Trade balance : Structural very large surpluses
Current account : Structural large surpluses (15% in 2008)
Remarks : Capital account is structurally negative due to large foreign investment of Singapore Government Investment Corporation and Temasek.
Effective exchange rate : Singapore dollar is gradually strengthening vis-à-vis the US $