The merlion roars
A report from Singapore by Matthew Gorman and Joel Shen of international law firm Stephenson Harwood
S
ingapore is hardly an emerging market and it certainly isn’t vying to join the BRICs, or indeed the
recently coined CIVETS. However, the lion city has taken 2010 by storm and looks set to enjoy continued growth in 2011. For some time now, the Singapore economy has been regarded as an illustration of the successful implementation of an export-oriented strategy. Its growth as a manufacturing and export base, particularly in the pharmaceuticals and electronics sectors, accompanied by its development as a finance and business centre, have led to its recognition as one of the most open economies in Asia. While Singapore is a relatively small
economy, its GDP in 2009 was only $165bn, it frequently ranks as or among one of the easiest countries in the world to do business and its exalted positions in wealth, economic freedom and clean government make it highly attractive to investors from around the globe. Perhaps never before has Singapore’s success been more apparent than this year. In the wake of the global financial crisis, analysts are already estimating that Singapore’s economy will likely expand at a record pace this year, outpacing even China and India to become one of the fastest-growing countries not just in Asia, but the world.
Record growth Following a recent report by Singapore’s Ministry of Trade and Industry that GDP grew by 18.1% in the first half of the year, the Singapore government revised its annual expansion forecast to an impressive 13% to 15% – up sharply from its earlier prediction of 7% to 9%. Whilst observers have long been bullish on Singapore’s growth outlook this year, these numbers are running well ahead of even the most optimistic estimates to date, and although
40 November/December 2010
a slowdown is anticipated in the second half of the year, many economists still consider the government’s growth forecast realistic. The phenomenal growth experienced by Singapore’s economy, which relies on trade, finance and tourism, will likely be led by a meteoric expansion of the manufacturing sector as non-oil exports soar by 20%.
The sterling performance of these new issuers comes as no surprise to most observers
Manufacturing and exports
Singapore’s manufacturing output in September grew at a pace of 26.2% year-on-year, driven by a strong recovery in the pharmaceuticals cluster, according to a recent report from Singapore’s Economic Development Board (EDB). According to figures released recently by the EDB, biomedical manufacturing led the pack, with the industry’s output in September increasing at a phenomenal 47.5% year-on-year, while other sectors such as precision engineering, machinery and electronics also registered robust growth. Much of the recent fluctuation in Singapore’s manufacturing figures may be attributed to global demand for Singapore-manufactured products, particularly biomedical goods and semiconductors.
Manufacturers in Singapore felt the brunt of the financial crisis as customers worldwide tightened their spending. However, this year’s figures tell a different story – the increase in global demand raised the country’s exports to Europe last month by 75% from the previous year. Singapore’s Asia-bound exports also increased significantly. Exports to China last month rose 39% and exports to Japan increased by 50%. Nearer to home, exporters have also seen similar
Business Money
increases in demand from neighbours Indonesia and Malaysia.
In spite of the emerging weakness in some
key export markets, there are signs in the US that a slowdown in the labour market may affect consumer confidence; and domestic demand remains depressed within the EU as concerns over the sovereign debt crisis persist, it is hoped that this will be offset by the brisk expansion in domestic demand.
Tourism booming
But manufacturing is just one of several industries that have attracted investor interest.
Analysts are now paying careful attention to the tourism industry and services segment, following the dropping of a four-decade long ban against casinos and the opening of two casino resorts earlier this year. Although these integrated resorts, one of which includes a Universal Studios theme park, experienced a few teething problems in the months immediately following their opening, they now appear to be in full swing, if the latest visitor numbers are anything to go by. Current forecasts have the casinos taking an annualised US$3.1-3.2bn in 2010 – a staggering figure considering that they have only just opened. Moreover, projections have this figure at US$3.8bn for 2011. According to reports by the Singapore
Tourism Board, September saw the tenth consecutive month of record visitor arrivals, 947,000 visitors, along with corresponding increases in visitor days and gazetted hotel room revenue.
In addition to the on-going attraction of
the two integrated resorts, the strong numbers may also be attributed to recent events such as the inaugural Youth Olympic Games and the Singapore Grand Prix, which has just enjoyed its third running and seems to go from strength to strength.
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