Charting Singapore s Economy, 1H 2017 Designed to help executives interpret economic numbers and incorporate them into company s planning. Publication Date: January 3 rd, 2017 Next Issue: To be published on July 3 rd, 2017
HELPING EXECUTIVES AROUND THE WORLD INTERPRET ECONOMIC NUMBERS Argentina Australia Brazil Brunei Cambodia Canada Chile China Hong Kong India Indonesia Laos Malaysia Mexico Myanmar New Zealand Peru Philippines Russia Singapore South Africa South Korea Taiwan Thailand Turkey United Kingdom United States Vietnam
EXECUTIVE SUMMARY ECONOMIC PROFILE ECONOMIC OUTLOOK Structure Competitiveness Development Growth Stability Singapore is the fourth largest economy in ASEAN with USD 293 billion GDP in 2015 In term of population, Singapore is the second smallest country in ASEAN with only 5.7 million people Unfavorable demographic structure for Singapore with relatively old population and declining working age group It has long been a trading (service) economy, with external demand far exceeding domestic one Singapore s economy relies on international trade much more than any other ASEAN economy Singapore s economy is service based with strong Manufacturing presence Economic Structure Part of the country s economic profile, economic structure section gives readers useful views to understand economic fundamental and determine what matters for the country s economy. 5
Singapore is the fourth largest economy in ASEAN with USD 293 billion GDP in 2015 2015 GDP USD billion, Market Exchange Rate US China Japan Germany UK ASEAN* France India Italy Brazil* Canada Korea Russia Australia Spain 4,124 3,365 2,858 2,433 2,420 2,073 1,816 1,773 1,551 1,378 1,326 1,225 1,200 18,037 11,182 Indonesia 859.0 Thailand 395.3 Malaysia 296.3 Singapore 292.7 Philippines 292.5 Vietnam 191.5 Myanmar 62.9 Cambodia* 17.8 Brunei 12.9 Laos* 12.6 Measuring the size of an economy Size of any economy is usually measured by calculating its Gross Domestic Product (GDP) which is the market value of all officially recognized final goods and services produced within a country in a given period of time. To compare GDP internationally, there is a need to convert value in local currencies to one main currency, normally USD. There are two popular exchange rate to be used. The first one is the official exchange rate for that particular period. The second one is the so called Purchasing Power Parity exchange rate, which takes into account the difference in living expenses between countries. The first method is more popular in comparing the size of each economy. Size of Singapore s economy Using the market exchange rate method, Singapore s GDP is around USD 292.7 billion in 2015, slightly lower than that of Malaysia and quite close to that of the Philippines. Mexico 1,144 Note: (*) IMF Estimate Source: IMF World Economic Outlook Database October 2016 6
Wages in Singapore is highest in ASEAN and comparable to advanced economies Average monthly wages in Asia and the Pacific 2013 or latest available year (US$) Australia (2013) Singapore (2013) New Zealand (2013) Japan (2013) South Korea (2013) Hong Kong (2013) Malaysia (2013) China (2013) Samoa (2012) Mongolia (2012) Thailand (2013) India (2011/12) Philippines (2013) Vietnam (2013) Indonesia (2013) Cambodia (2012) Pakistan (2013) Nepal (2008) 4,642 3,694 3,419 3,320 2,841 1,780 651 613 565 411 391 215 215 197 183 121 119 73 International Wage Comparison Due to differences in definitions and coverage, comparing average wages across countries is not always straightforward. The chart presents information on wage levels for countries with broadly comparable data, compiled by International Labor Organization from comprehensive National Labor Force Surveys. Wages in Singapore Average monthly wages in Singapore in 2013 was around USD 3,694, by far the highest in ASEAN. Singapore s wage level is comparable to advanced economies. Source: ILO Global Wage Report 2014/15 Asia and the Pacific Supplement 14
Singapore economic expansion slowed down in 3Q16 with 1.1% year on year growth Real GDP growth Year-on-year, 3Q16 India Philippines China Vietnam Indonesia New Zealand Malaysia Thailand South Korea Taiwan Hong Kong Australia United States Euro area Japan Singapore 1.1% 1.1% Singapore s Real GDP growth Year on year, last 8 quarters 7.3% 2.8% 7.1% 2.7% 6.7% 6.4% 5.0% 2.0% 2.0% 4.5% 1.7% 1.8% 1.8% 4.3% 3.2% 2.6% 1.1% 2.0% 1.9% 1.8% 1.7% 1.7% 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 GDP growth in the latest quarter Real GDP growth in the latest quarter from major economies in the world sorted from highest to lowest. GDP growth for Singapore s economy in 3Q16 Singapore economic expansion slowed down in 3Q16 with 1.1% year-on-year growth. This growth level is lower than in most major economies in the region. Source: The Economist, Department of Statistics, Singapore; Charting Economy analysis 32
Sharp drop in SGD value against USD during the second half of 2016 Singapore Dollar Exchange Rate Per USD, mid point Singapore Dollar Value Indexed per USD, mid point, 31/12/15 = 100 1.46 108.0 1.44 106.0 1.42 1.40 104.0 1.38 102.0 1.36 1.34 100.0 Exchange rate A stable exchange rate is preferred in the world where most countries adopt floating rate policy. Volatile exchange rate can certainly harm international trade and investment. YTD change in Singapore Dollar Sharp drop in SGD value against USD during the second half of 2016, possibly due to both external factors (Fed decision, Brexit, Trump etc.) and internal economic slow down. 1.32 98.0 1.30 31/12/15 31/03/16 30/06/16 30/09/16 1.28 31/12/15 31/03/16 30/06/16 30/09/16 96.0 Source: Oanda 44
Singapore is the easiest place in ASEAN to start a business Starting a business rank Cost - Paid-in min. Procedure - Cost - Men Procedure - Time - Time - Men Women (% capital (% of Economy Rank DTF* Men (% of income Women Women (days) of income income per (number) per capita) (number) (days) per capita) capita) New Zealand 1 100.0 1 0.5 0.3 1 0.5 0.3 0.0 Hong Kong SAR, China 3 98.2 2 1.5 0.6 2 1.5 0.6 0.0 Singapore 6 96.5 3 2.5 0.6 3 2.5 0.6 0.0 Aus tralia 7 96.5 3 2.5 0.7 3 2.5 0.7 0.0 Korea, Rep 11 95.8 2 4.0 14.6 2 4.0 14.6 0.0 Taiwan, China 19 94.4 3 10.0 2.1 3 10.0 2.1 0.0 Thailand 78 87.0 5 25.5 6.6 5 25.5 6.6 0.0 Brunei Darussalam 84 86.7 7 14.0 1.6 8 15.0 1.6 0.0 Japan 89 86.1 8 11.2 7.5 8 11.2 7.5 0.0 Malaysia 112 83.7 8 18.0 6.2 9 19.0 6.2 0.0 Vietnam 121 81.8 9 24.0 4.6 9 24.0 4.6 0.0 China 127 81.0 9 28.9 0.7 9 28.9 0.7 0.0 Timor-Leste 145 77.1 4 9.0 0.5 4 9.0 0.5 260.1 Myanmar 146 77.1 11 13.0 40.4 11 13.0 40.4 0.0 Indonesia 151 76.4 11.2 24.9 19.4 11.2 24.9 19.4 0.0 India 155 74.3 12.9 26.0 13.8 12.9 26.0 13.8 0.0 Lao PDR 160 72.4 8 67.0 4.6 8 67.0 4.6 0.0 Philippines 171 68.9 16 28.0 15.8 16 28.0 15.8 3.1 Cambodia 180 54.9 9 99.0 57.2 9 99.0 57.2 22.5 Central African Republic 190 31.4 10 22.0 209.4 10 22.0 209.4 556.6 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. The most recent round of data collection for the project was completed in June 2016. Starting a Business in Singapore Singapore is the easiest place in ASEAN to start a business with very low cost and short amount of time. Note: (*) An economy s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier Source: Doing Business 2017 48
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