Singapore Economy

Singapore Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

According to, Singapore is the region’s most advanced (and stable) economy. In the pandemic year 2020, draconian covid measures resulted in the historically highest deficit of 14% of GDP, so in 2021 and 2022 the government had to correct the deficit to 1.6% of GDP, or CZK 90 billion, or 0.5% of GDP and CZK 47 billion. Anyway, this is not a big problem for Singapore even though its debt to GDP reaches 135% – these are “operating loans” in SGD that are used for investments through the sovereign wealth fund GIC (one of the largest in the world) or the investment company Temasek Holdings. A growing (worldwide) problem is higher inflation – it shot up to 4% in 2021 and is expected to be only slightly lower in 2022. Price increases are fueled mainly by food prices (including high inflation in Malaysia, where a lot of food is imported from), housing (rents and apartment prices increased by more than 20% year-on-year in 2021) and energy (the price of oil and gas, which produces about 90% of Singapore’s energy). In addition to problems with regional and global transport, extremely generous government support programs (and with it increasing salaries) and the increase in the VAT rate from 7 to 9% are also to blame. On the other hand, revived domestic demand as well as the easing of covid measures helped Singapore to grow its GDP by 7.6% in 2021. The manufacturing sector (chips and electronics) was particularly notable, registering 14% year-on-year growth in the fourth quarter of 2021. In 2022, growth is estimated to be roughly halved.

Singapore is one of the most advanced economies in the world, it is a financial, trade and transport center of world importance. Singapore’s largest trading partner is Malaysia. The limited area of ​​the country combined with one of the highest GDP per capita in the world and high purchasing power means that the country is heavily dependent on imports and the state of international transport (in the case of food, approx. 90% of consumption is imported, a similar situation is in the case of primary materials or simpler products and semi-finished products). Mainly electronics, chemical products and services are exported.

Table from MOP + additionally balance of payments, indebtedness/GDP.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 1.4 -5.4 7.6 3.8 3.2
GDP/population (USD/PPP) 102,281.00 100,057.80 115,854.00 121,190.00 125,610.0
Inflation (%) 0.8% 0% 4% 3.1% 1.5%
Unemployment (%) 2.2 3 2.7 2.3 2.2
Export of goods (billion USD) 390.5 374.6 456.4 506.6 511.5
Import of goods (billion USD) 359.1 329.6 405.8 466.1 460.9
Trade Balance (Billion USD) 96.8 103.6 118.2 116.4 126.7
Industrial production (% change) -1.5 7.3 13.2 5 3.3
Population (millions) 5.7 5.7 5.5 5.6 5.8
Competitiveness I.63 I.63 V.64 ON ON
OECD export risk 0/7 0/7 0/7 ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -1.6
Public debt (% of GDP) 145.9
Current account balance (billion USD) 71.9
Taxes 2022
AFTER 15-19.5%
F.O 15%
VAT 8%

In the pandemic year 2020, draconian covid measures resulted in the historically highest deficit of public finances in the amount of 14% of GDP, so in 2021 and 2022 the government had to correct the deficit to 1.6% of GDP, or CZK 90 billion, respectively. 0.5% of GDP and CZK 47 billion. However, Singapore needs to increase tax revenue in the long term in order to invest in increasingly expensive infrastructure, healthcare for an aging population, and the transition to a carbon-neutral economy. The planned increase in VAT from the current 7% to 9% by 2024 will help in particular, while it is assumed that this will only have a slight effect on private consumption, but an additional 70 billion CZK should flow into the budget. Providing a government support package will help offset the negative impact on low- and middle-income households. A new property tax will also be introduced – this will take the form of an additional tax on real estate and a tax on luxury vehicles; but it will not touch the taxation of wealth or capital gains, which would antagonize the wealthy inhabitants and disturb the companies settled in the country. It is therefore unlikely to threaten Singapore’s position as a wealth management hub.

Even though Singapore’s debt to GDP is 145.9%, it is not a big problem for Singapore. These are “operating loans” that are used for investments through the sovereign wealth fund GIC (one of the largest in the world) or the investment company Temasek Holdings, so overall Singapore is a heavily creditor state. The current account surplus is projected to remain substantial in 2022-26 and the country’s pro-trade policies will further strengthen its position as a global trade hub. This is also why the MAS, the central bank of Singapore, is trying to maintain the SGD exchange rate against the USD in the long term, which is also helped by unusually high foreign exchange reserves (fed, among other things, by income from significant investments by GIC and Temasek Holdings). Although supplies of manufactured goods, including electronics and chemicals, will cool from the rapid growth rate achieved in 2021, it is expected that that they will remain stable in 2022, thanks to strong demand from China and advanced economies. Import growth is certain to outpace exports in 2022 due to rising domestic demand and increased energy costs, which will slightly reduce the merchandise trade surplus.

Banking system

Supervision and control over the banking system is carried out by the central bank, the Monetary Authority of Singapore (MAS), which guarantees the stability and openness of the system, which is necessary to maintain the country’s position as a world trade hub. Interest rates are low, at the beginning of 2022 it was 0.5% with the assumption of moderate growth.

More than 200 banks are registered in the country, they are of two types:

1) The most common are the so-called ” commercial banks “, which are further divided according to the type of license received from MAS.

2) The so-called ” Merchant banks ” are banks whose content mainly includes trading on the stock exchange, with currencies and commodities, and services to businesses and assistance in international transactions.

Overview of major Singapore banks:

  • The Development Bank of Singapore LTD (DBS): The bank was established by the Singapore government in 1968. Today, DBS is the largest bank in Southeast Asia by assets and is among the largest banks in Asia, with assets of approximately 10 billion in 2019. CZK.
  • Oversea-Chinese Banking Corp LTD (OCBC): OCBC Bank was formed by the consolidation of three banks in 1932. OCBC Bank has assets of more than 8 billion. CZK, making it the second largest bank in Southeast Asia by assets and one of the largest banks in the Asia-Pacific region.
  • United Overseas Bank LTD (UOB): The bank was founded in 1935 as United Chinese Bank by local businessman Wee Kheng Chiang together with a group of businessmen of Chinese origin. The bank is the third largest bank in Southeast Asia by total assets.
  • Standard Chartered: The bank opened its first branch in 1859, making it one of the oldest continuously operating banks in Singapore. It manages assets worth over CZK 550 billion.
  • Citibank: Citibank began operations in Singapore on July 1, 1902. Back then it was called the International Banking Corporation (IBC) and was the first American bank to set up a branch in Singapore.

The banking market is competitive and provides all standard and advanced products and services, including a wide range of companies developing and providing fintech services.

Tax system

Singapore’s tax system is very advanced, transparent and predictable. The main pillars of Singapore’s tax system are (i) Corporate Income Tax, (ii) Personal Income Tax and (iii) Goods & Services Tax (GST). Details can be found on the Inland Revenue Authority of Singapore website.

The tax system recognizes two basic groups of taxes:

  1. A) Direct taxes:
  2. Income tax

– legal entities (corporate tax): 17%

– resident natural persons 0 – 22%, this is a progressive tax, the plan is to increase it to 24%

– non-resident natural persons – rates of 15% and 22% depending on the type of income, the plan is to increase it to 24%

  1. Property tax

– for industrial and commercial buildings, it is 10%

– for real estate intended for housing (residential), the tax is set at 4% of the value of the real estate

  1. Tax on bets and lotteries

– 30% of the winning amount

  1. B) Indirect taxes
  2. VAT

– GST (Goods, and Services Tax) – 7% in 2022 will gradually rise to 9% in 2024

  1. Consumption tax

– the rate varies according to the type of goods (alcohol, tobacco products, motor vehicles, petrochemical products – gasoline and diesel fuel).

Singapore’s tax system is stable and predictable, but the COVID19 pandemic and infrastructure investment and green transformation are forcing more revenue into the state budget. That’s why the government is increasing VAT to 9% in 2024, personal income tax rates up to 24%, and some changes to property and luxury car taxation.

Singapore Economy