This year has caused a slowdown in the global economy. Where demand growth will slow down and have an impact on exports in Singapore. China is still implementing lockdowns in several regions, causing the economy to slow down and reducing export activities in the country. Singapore’s Gross Domestic Product (GDP) recorded a slowdown in the first quarter of 2022. Which is affecting Singapore economic growth.
However, the government is optimistic that its economy can grow at the lower limit of the target. For now, it has had a huge impact on the weakening Singapore dollar. Nevertheless, according to an analysis by the Monetary Authority of Singapore (MAS) in the second quartile of 2022 the Singapore economy is expected to grow 4.8% in the second quarter of 2022 and will grow 3.8% in full of 2022. The decline in growth was influenced by many factors, including rising inflation and rising energy and food prices.
Factors Affecting Singapore Economic Growth
Singapore now needs a stronger manufacturing business expansion because it will have an impact on Singapore economic growth in 2022. One of the survey respondents saw Singapore economic growth average 5.0% for the main inflation this year, and 3.4% for the core inflation rate.
Both are higher than the figures seen in the previous opinion in March of 2022. The Monetary Authority of Singapore or commonly abbreviated as MAS is tightening monetary policy to combat inflation arising from disruptions in global supply chains.
The total area of the country Singapore is slightly larger than Jakarta and is one of the rich developed countries in the world. However, the country was once poor. Many of his people are starving because there are no natural resources. After independence in 1965, it slowly rose and became a developed country. Here are the factors affecting Singapore economic growth.
Geographical Location
Because of the very strategic geographical location in the middle of Southeast Asia, Singapore is a very suitable to be the center for container ship trading and logistics. One of them is in export activities to East Asian countries such as Japan and South Korea, where container ships from the Middle East must pass through the Strait of Malacca. And Singapore is also a refueling place for container ships.
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Stability in Politics
Singapore has a one-party and stable political system, thus providing a fertile foundation for Singapore’s economic growth. The country is believed to be able to develop faster than many other developing countries.
The political party is called the People’s Action Party which is the main political party in Singapore. The party was founded in 1954 and became a pro-independence party derived from previous student organizations, it dominated the political system greatly.
One of the founding members of the party was Lee Kuan Yew, who served as Singapore’s first prime minister and ruled for three decades. Lee maintains very strict one-party rules through various institutions, which gives him the power to realize his grand vision of making Singapore a stable place to conduct business.
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Efficient and Competent Public Policy
There are so many scholarships to study abroad and there are also many bright Singaporean youths, so later in return, the government will require young people studying abroad with scholarships to Return to Singapore and work in the public for several years.
The existence of a high-wage policy that has long been in effect for civil servants. The government also adjusts salaries regularly to ensure they work competitively. This policy is based on the belief that a salaried civil servant is very unlikely to engage in corrupt practices.
When corruption is true in the public sector, the government will ruthlessly punish the culprits. So with this policy, Singapore has created a public sector environment where talented citizens work and contribute to society.
Large Number of Investors
Corporate income and tax rates in the country are among the lowest in the world. In addition, there are many tax exemptions such as capital gains, dividends, inheritances, and gifts that are not taxed at all.
The government supports the sector and industry, which has a major role in attracting foreign investment and companies to cooperate in the country. Most of the civil servants are educated elites, who are very industry-savvy so they should be focused on and promoted.
Comfortable Living Environment
One of the problems that occur in Singapore is the high economic inequality between rich and poor. Nevertheless, the country can offer an affordable living environment for the underprivileged.
The existence of public transportation, including buses and Mass Rapid Transit (MRT) trains whose fares are cheaper compared to other developed countries such as the United States and the United Kingdom with very good service quality.
There are restrictions on the purchase of the number of cars by setting a very high price for a car license. Due to the high licensing costs, buying a car in Singapore can cost three times the cost in South Korea. So many citizens prefer to use public transportation.
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In addition to the five factors that cause Singapore to become a developed country, the country also relies on exports to spur Singapore economic growth. Where the ratio of exports to Gross Domestic Product (GDP) of Singapore is more than 100% and is the country with the largest export-to-GDP ratio in the world. So it can be concluded, that when exports start to be high, Singapore economic growth is also high.
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