Overview of Singapore’s Economy
Intriguingly nestled in Southeast Asia, Singapore boasts a history marked by remarkable transformations. Originally a modest fishing village, it has metamorphosed into a global economic powerhouse. Today, while cherishing its maritime heritage, Singapore actively engages in contemporary commerce and technology.
This tiny island nation exemplifies the epitome of developmental achievement. Rising from humble origins to secure its place as a high-income economy, Singapore’s story is one of unprecedented success. As it forges ahead, Singapore gracefully melds age-old traditions with avant-garde innovations, crafting a landscape teeming with opportunities – though not devoid of distinctive challenges.
GDP Growth
Singapore has consistently shown positive GDP growth1 over the past two decades, with only a brief contraction in 2020, which can be attributed to the global economic downturn caused by the COVID-19 pandemic. The strong GDP growth rates in many years, particularly in 2010 and 2007, can be attributed to various factors, including robust international trade, a highly skilled workforce, and strategic economic policies. The 2021 and 2022 growth rates, though positive, were lower compared to the pre-pandemic years, reflecting the ongoing challenges posed by the pandemic.
| Year | GDP | Per Capita | Growth |
| 2022 | $466.79B | $82,807 | 3.6% |
| 2021 | $423.8B | $77,710 | 8.9% |
| 2020 | $348.39B | $61,274 | -3.9% |
| 2019 | $376.84B | $66,071 | 1.3% |
| 2018 | $376.87B | $66,837 | 3.6% |
| 2017 | $343.27B | $61,165 | 4.5% |
| 2016 | $319.03B | $56,896 | 3.6% |
| 2015 | $308B | $55,646 | 3% |
| 2014 | $314.86B | $57,565 | 3.9% |
| 2013 | $307.58B | $56,967 | 4.8% |
| 2012 | $259.09B | $55,548 | 4.4% |
| 2011 | $279.36B | $53,892 | 6.2% |
| 2010 | $239.81B | $47,237 | 14.5% |
| 2009 | $194.15B | $38,927 | 0.1% |
| 2008 | $193.62B | $40,009 | 1.9% |
| 2007 | $180.94B | $39,433 | 9% |
| 2006 | $148.63B | $33,768 | 9% |
| 2005 | $127.81B | $29,961 | 7.4% |
| 2004 | $115.03B | $27,608 | 9.9% |
| 2003 | $97.65B | $23,730 | 4.5% |
| 2002 | $92.54B | $22,160 | 3.9% |
| 2001 | $89.79B | $21,700 | -1.1% |
| 2000 | $96.08B | $23,853 | 9% |
Singapore’s per capita income has seen steady growth over the years, with a significant increase from $21,700 in 2001 to $82,807 in 2022.2 This remarkable increase can be attributed to Singapore’s focus on economic diversification, investment in education and technology, and the attraction of foreign direct investment.
In summary, Singapore’s economic performance is characterized by consistent growth, high per capita income, and resilience in the face of global economic challenges, with 2020 being an exception due to the pandemic. The government’s strategic policies and emphasis on education and technology have played a significant role in driving this economic success.
Foreign Direct Investment
Singapore’s foreign direct investment (FDI) landscape has exhibited remarkable fluctuations in recent years. In 2022, Singapore’s FDI surged to $140.84 billion, marking a significant 1.66% increase from the previous year.11 This growth demonstrates Singapore’s resilience and attractiveness to international investors, highlighting the country’s stable economic environment.
In contrast, 2020 saw a temporary dip in FDI to $78.45 billion, reflecting a 25.5% decline from 2019.11 This decline was primarily attributed to the global economic challenges posed by the COVID-19 pandemic. However, Singapore rebounded swiftly in 2021 and 2022, showcasing its ability to bounce back and maintain its appeal to foreign investors. Overall, Singapore’s FDI trends underscore its reputation as a preferred destination for international investments, thanks to its stable economic climate and business-friendly policies.
Growing Markets & Markets with High Growth Potential
These industries showcase the potential for growth in Singapore:
The energy and utilities sector in Singapore has experienced substantial growth, with seven companies making it to the list of the fastest-growing firms. Rex International, a multinational oil company, topped the charts in terms of absolute growth, indicating the sector’s significance in Singapore’s economic landscape.12
The logistics and transportation sector has seen an upsurge in demand, especially between 2020 and 2021, as global supply chains faced challenges due to COVID-19. This led to a spike in demand for logistics and transportation services, resulting in the inclusion of eight companies from this sector in the 2023 list. 12
Singapore’s manufacturing output rebounded in 2021, with a value of approximately S$372.4 billion, signifying a recovery from the economic shocks of the COVID-19 pandemic.12 This recovery contributed to the presence of a greater number of manufacturing firms on the 2023 ranking, indicating the sector’s growth potential.
While several sectors showed growth, fintech remained a prominent industry with 10 high-growth companies making it to the 2023 list.12 Singapore’s status as a dynamic global financial hub and its competitive economy have contributed to the growth of the fintech sector.
Singapore’s Demographics
Singapore boasts a relatively small but highly urbanized population of 6 million individuals.4 This compact size enables efficient urban planning and infrastructure development.
Their high median age of 42.8 years4 which indicates an aging population can be attributed to lower birth rates and improved healthcare, leading to longer life expectancies. Additionally, a significant proportion of the population belongs to the post-war baby boomer generation.
Furthermore, Singapore has one of the lowest fertility rates in the world, at just 1 live birth per woman.4 Factors such as the high cost of living, career aspirations, and limited family support structures contribute to delayed family planning and smaller family sizes.
Both sexes in Singapore enjoy a remarkable life expectancy of 84.3 years,4 reflecting a high standard of healthcare and living conditions.
With such an economic development, a compact-sized nation like Singapore is fully urbanized.4 Additionally, in 2021, the nation had a sex ratio of 109.82 males per 100 females.5 This slightly skewed gender ratio may result from a combination of factors, including migration patterns, gender preferences in the population, and the influence of industries that attract more males or females.
In 2020, there was significant income disparity in Singapore. Approximately 16.01% of resident-employed households had a monthly income of 20 thousand Singapore dollars or more, while only 2.27% had an income of less than one thousand Singapore dollars.6
Singapore Consumers and Consumer Trends
Singapore’s dynamic consumer landscape presents a captivating narrative, where innovation and contemporary influences converge. This section examines Singaporean consumer trends, effectively melding insights from a variety of sources to offer a comprehensive perspective.
Technology Gains Traction Among Older Consumers
As the older generation embraces technology with increasing proficiency, a growing number of senior users are venturing online, not just for shopping but also for entertainment. Among respondents aged 55 and above, a substantial 70% revealed that they have incorporated e-commerce into their daily lives. 7 Additionally, 84% of this age group mentioned that they now purchase a wider range of items online, surpassing both Gen Z and Gen X, where 80% follow the same trend.7
What’s particularly striking is the growing enthusiasm of older users for engaging with Shopee’s in-app games and livestream content. Half of the senior demographic surveyed expressed their engagement with the Shopee app and its games during leisure moments. For businesses, this indicates a widening opportunity to connect with this burgeoning user segment. However, success in this endeavour hinges on their ability to curate and deliver the right content mix at precisely the right moments to effectively engage these users. 7
The pandemic has expedited the process of digital adoption among the older populace, primarily as a consequence of precautionary measures related to safe distancing and heightened hygiene considerations. Utilising applications such as TraceTogether and communication platforms to maintain contact with their families, Singapore’s senior demographic has effectively embraced technological innovations. 7
The Emergence of Purposeful Shoppers
In the context of the evolving shopping landscape, marked by the emergence of purposeful shoppers, recent insights from a survey conducted by DBS Bank8 reveal notable shifts in consumer behavior in Singapore. As the prices of goods and services surge at an unprecedented rate, consumers are displaying a heightened consciousness about their spending habits, driven by the need to judiciously manage their hard-earned finances.
The survey underscores a predominant inclination among respondents to prioritize essential household expenditures, such as groceries, utilities, and dining out, while consigning shopping, recreation, and travel to the lower rungs of their spending priorities. Despite the Consumer Price Index (CPI) in Singapore recording a year-on-year increase of 5.4% in April, a significant proportion of survey participants perceive a substantial escalation in their cost of living, with over half reporting an increase exceeding 10%.8
In response to these economic challenges, a resounding 74% of respondents voice their commitment to adopting a “save more, spend less” approach, actively seeking out more cost-effective alternatives. 8 Additionally, 64% of those surveyed anticipate alterations in their spending behavior as they grapple with the pressures of inflation. 8
Furthermore, the DBS survey indicates a significant trend toward consumers reducing their consumption of comfort items, including branded food products, chocolates, alcohol, and snacks, in favor of more economical choices.8 These findings underscore the evolving mindset of purposeful shoppers, who are increasingly making deliberate and discerning choices in their purchasing decisions in the face of economic uncertainty.
Contactless Convenience
In Singapore, a notable shift in payment preferences has been underscored by Visa’s Consumer Payment Attitudes Study,9 indicating that card payments have surged ahead of cash transactions. According to the study, card payments now account for a significant 97% of all payments, surpassing cash, which stands at 82%.9 This shift is consistent across generations, spanning from Baby Boomers to Gen Z, with over 95% of Singaporean consumers opting for credit or debit cards. 9
The rise of card payments, especially contactless cards, is driven by their widespread adoption and preference. Contactless cards are now the favored payment method across various categories, including everyday necessities like convenience store purchases (54%), retail shopping (53%), supermarket transactions (52%), public transport (33%), and even taxi and ride-sharing services (28%).9 When it comes to bill payments, online card transactions remain the method of choice (35%).9
Notably, contactless payments for Visa cards in Singapore have reached an impressive penetration rate of over 95%, one of the highest globally. 9 This translates to more than nine out of every ten Visa transactions being conducted using contactless methods. 9 Consumers who prefer contactless cards have established regular usage patterns, with a substantial 89% using contactless payments at least once a week, and 41% using them four or more times weekly. 9
While mobile contactless payments (52%) and QR code payments (48%) are not yet the most widely used methods, they are steadily gaining popularity among Singaporean consumers. 9 Mobile contactless payments, in particular, have seen increased adoption, especially for public transport, fuel purchases, and dining, with the pandemic playing a role in accelerating this shift. 9 QR code payments are also increasingly being embraced for retail shopping and convenience store transactions. 9
In Singapore’s diverse landscape of cashless payment options, nearly two-thirds of consumers (63%) have made efforts to embrace cashless transactions, with a substantial portion (42%) successfully maintaining this practice for at least a week. 9 Among those yet to make the transition, a majority express confidence in their ability to adapt in the next few days (60%), while nearly half (48%) believe they can comfortably sustain cashless transactions for an entire week. 9 Furthermore, 39% of Singaporean consumers are carrying less cash in their wallets due to their growing reliance on contactless payment methods. 9 This transformation underscores the growing significance of contactless convenience in Singapore’s evolving payment ecosystem.
Seamless Shopping
In the realm of seamless shopping experiences, Singaporean consumers are increasingly blurring the lines between online and physical retail channels, according to insights from a GlobalData report.10 Around 50% of consumers in Singapore prefer the online sphere for checking and comparing prices, while 49% still favor physical stores for making their product purchases. 10 Additionally, the report reveals that approximately 48% of consumers intend to engage in online product browsing before completing their purchases in physical stores, while 44% plan to seek advice or services in stores before making online purchases. 10
This shift towards omnichannel shopping reflects an evolving retail landscape where the boundaries between online and offline commerce are becoming increasingly fluid. It signifies the emergence of a unified retail sector that is rapidly undergoing digital transformation. Over the past two years, omnichannel spending has surged by 20%, and by 2026, it is projected to constitute over 61.7% of total retail revenue. 10 Brands are actively investing in integrated omnichannel strategies to provide consumers with seamless, hybrid shopping journeys, both in-store and online. 10
This transformation is unfolding against the backdrop of Singapore’s rise as a significant e-commerce hub. The market has experienced a dramatic transformation, fueled by the proliferation of mobile devices and enhanced broadband connectivity, resulting in a surge in online shopping activity. However, while online shopping has seen remarkable growth, the rates are starting to normalize as consumers rekindle their interest in traditional brick-and-mortar stores. 10 In 2022, online penetration reached 10.7%, marking a 0.6% point increase compared to the previous year. 10
In light of these evolving dynamics, businesses must adapt to cater to consumers who seamlessly transition between online and in-store channels. The focus should shift from exclusive e-commerce growth to integrating comprehensive omnichannel offerings that align with evolving consumer preferences and needs.
Key Takeaways
- Consistent GDP growth, with occasional dips like in 2020 due to the pandemic.
- Foreign Direct Investment (FDI) fluctuates but rebounds, showcasing its attractiveness to global investors.
- Key sectors with growth potential include energy, logistics, manufacturing, and fintech.
- Facing challenges like aging demographics, low birth rates, gender imbalances, and income disparities.
- Older generations in Singapore are increasingly adopting technology for shopping and entertainment.
- Economic challenges lead to more conscious spending habits, prioritizing essentials over non-essentials.
- Singaporeans widely embrace contactless card payments, mobile, and QR code payments.
- Omnichannel Shopping: Consumers blend online and physical retail experiences, reshaping the retail landscape.
Additional Resources
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Sources:
1https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=SG
2https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2022&locations=SG&start=2001
3https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2022&locations=SG&start=200
4https://www.worldometers.info/demographics/singapore-demographics/
7https://sg.news.yahoo.com/shopee-consumer-trends-report-reveals-020000733.html
