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Singapore Economy Set For Modest Growth

by Mary Swire, Lowtax.net, Hong Kong
28 May, 2015

The Singapore economy grew by 2.6 percent on a year-on-year basis in the first quarter of 2015, faster than the 2.1 percent growth in the preceding quarter, the Government of Singapore has announced.

The Ministry of Trade and Industry (MTI) announced on May 26 that the economy expanded by 3.2 percent in Q1 2015, moderating from the 4.9 percent growth seen in the preceding quarter.

Singapore's manufacturing sector performed particularly poorly in the first quarter, contracting by 2.7 percent year-on-year and extending the 1.3 percent decline in the previous quarter. The MTI attributed this decline to falling output in the transport engineering, electronics, and biomedical manufacturing clusters.

However, the construction, wholesale and retail, information and communications, business services, and transportation and storage sectors all grew in the first quarter. The finance and insurance sector performed particularly strongly, posting growth of 7.9 percent in the first quarter, although this was down on the 10.3 percent growth reported in the preceding quarter.

Taking into account global macroeconomic factors, the MTI expects the Singapore economy to grow by a modest 2-4 percent in 2015.

In March 2015, Singapore was once again named in the top tier of global financial centers, alongside New York, London, and Hong Kong. However, it remains to be seen how the recent budget, in which tax was increased, affects Singapore's status as a premier trading and financial hub and its economic perfomance this year.

In the 2015/16 Budget, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced the creation of a new top rate of income tax of 22 percent, an increase from the current highest rate of 20 percent. However, tax on high earners in Singapore remains well below the top rates of income tax seen in much of the developed world, particularly in western Europe and North America.

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