Singapore’s export-oriented economy struggled in the face of the COVID-19 pandemic. Real GDP fell 5.4% in 2020, the biggest contraction since independence in 1965. The aviation, transport and hospitality sectors have suffered from the downturn in tourism and mobility restrictions—and are expected to remain weak again in 2021. Financial and professional services have proved more resilient to lockdowns, supported by remote working. Recovery in global trade, large fiscal stimulus packages implemented in 2020 and 2021 and accommodative monetary policy should support a return to growth in 2021 and beyond. The government expects GDP to return to pre-pandemic levels in the second half of 2021.
That said, a resurgence of COVID-19 infections, both domestically and in major trading partners, remains a threat to the export-led economy. Longer term challenges include an ageing population and mitigating exposure to environmental risks. But Singapore’s strong fiscal and external buffers and highly effective institutions provides authorities greater ability to address these cyclical and structural challenges.
Singapore’s per capita GDP declined in 2020 but remained high at around US$59,000. According to IMF data, Singapore’s GDP per capita is the 8th highest in the world, ahead of Australia (9th) and Netherlands (10th). Per capita GDP is expected to grow to US$70,000 by 2024. Authorities’ ongoing plans to invest further in human capital and pursue policies that transition the country to a higher-productivity, knowledge-based economy will help support growth in incomes.