MAJOR MACRO ECONOMIC INDICATORS
|2019||2020||2021 (e)||2022 (f)|
|GDP growth (%)||1.3||-5.4||7.2||3.4|
|Inflation (yearly average, %)||0.6||-0.2||2.3||3.0|
|Budget balance (% GDP)*||0.2||-13.9||-2.2||2.0|
|Current account balance (% GDP)||14.3||17.6||19.5||17.0|
|Public debt (% GDP)||125.5||150.2||137.9||139.0|
(e): Estimate (f): Forecast *Fiscal year from April 1 - March 31
- High non-price competitiveness
- High value-added industry (new technologies, finance, chemicals, pharmaceuticals)
- Major goods transport and trading hub (air and sea), financial centre
- Large FDI inflows thanks to the advantageous tax regime, political stability and excellent business climate
- Asia's leading exporter of capital through sovereign wealth funds
- Dependent on exports and imports (energy and food)
- Skilled labour and housing shortages, ageing population
- Vulnerable to the structural slowdown of the Chinese economy and U.S.-China geopolitical tensions
Solid growth expected in 2022
Singapore’s economic recovery will broaden out as the country moves into endemic living and continues to reopen borders. While we expect the GDP growth rate to moderate in 2022 after a solid rebound in 2021, it is still likely to remain above trend. A sustained global economic expansion will benefit the Singaporean economy given its heavy reliance on international trade. Singapore’s trade-to-GDP ratio is over 300%, with net exports of goods and services accounting for over a quarter of GDP. The manufacturing industry (>20% of GDP), where electronic products and machinery and transport equipment account for almost half of all domestic exports, will perform strongly in this environment. The info-communications and financial sectors (nearly 2 0% of GDP) will also continue to grow robustly in the COVID-19 era, alongside the pharmaceutical industry. Construction should continue to face challenges related to higher material costs and labour shortages. Private investment (around 25% of GDP) may improve amid a brightening economic outlook, a gradual relaxation of border restrictions, and a sustained global recovery, with Singapore also expected to take progressively less stringent containment measures.
Further improvement on the labour market should support household spending (34% of GDP). Meanwhile, inflationary pressures are accumulating amid strengthening global demand and intensifying supply constraints. A quicker-than-expected rise in consumer prices and strong upward pressure on the local currency could prompt the Monetary Authority of Singapore to further tighten its monetary policy, after already doing so in October 2021 and an off-cycle meeting in January 2022.
Restoring fiscal balance
The budget deficit is expected to narrow from 13.9% in FY2020 to 2.2% in FY2021. Solid revenue collection in the current fiscal year (ending March 2022) could see Singapore moving closer to a balanced budget. As the crisis subsides, we anticipate Singapore to return to a budget surplus in the next fiscal year (starting April 2022), which will help the government to achieve the fiscal rule of a balanced budget over its five-year term in office. After spending 20% of GDP (SGD 100 billion) in 2020, the government’s relief measures became more targeted in 2021, aiming at supporting businesses and workers in vulnerable sectors (e.g. retail, food & beverage, aviation), as export-facing sectors have mounted a strong recovery. Despite a significant drawdown of SGD 53.7 billion (11% of GDP) in the past reserves, Singapore’s fiscal reserves remain substantial, estimated at between 200% and 300% of GDP.
Singapore is a net creditor country, with a strong balance sheet and zero net debt. The seemingly high public debt (125% of GDP in 2019) comprises mainly long-term bonds and securities issued for reasons unrelated to the government’s fiscal needs. However, the parliament passed the Significant Infrastructure Government Loan Act in May 2021, which allows the government to borrow up to SGD 90 billion to finance long-term and large infrastructure projects (costing at least SGD 4 billion each). The plan to increase the goods and services tax (GST) between 2022 and 2025, will help raise SGD 3.0 to 3.6 billion of revenue each year.
Singapore continues to enjoy a substantial current account surplus (20% of GDP in H121), driven by a trade surplus exceeding 20% of GDP. The country is a net recipient of foreign direct investment (15-20% of GDP in recent years), which is more than offset by its outflows of portfolio investment, financial derivatives and other investments. Despite a sharp drop in net inflows of FDI in 2020, net outflows of portfolio investment were reduced, and that of other investments turned into net inflows, all of which contributed to Singapore registering a net inflow in its financial account for the first time since 1993.
Political leadership succession
The People’s Action Party (PAP) remains a dominant ruling party in Singapore’s politics, although its 2020 general elections saw its popular vote drop from 70% in 2015 to 61%. While the PAP government
remains firmly in power, the plan for Singapore’s leadership succession was disrupted when DPM Heng Swee Keat announced that he will step aside as the leader of the fourth-generation PAP leadership team in April 2021. The search for clarity as to the next successor to replace Prime Minister Lee Hsien Loong, who has been premier since 2004, will be a key political theme in 2022 as Singapore emerges from the pandemic.
Last updated: February 2022
Cheques, cash and bank transfers are all frequently-used means of payment within Singapore. Bank transfers, fast and secure, are widely used for international transactions. Standby Letters of Credits and Irrevocable Letters of Credit are often used in export transactions.
The amicable phase begins with the seller contacting buyers in writing, by telephone and, where permissible, by visiting the buyer’s business premises. If there is no response from the buyer, a site visit and online searches are conducted to ascertain the operating and legal status of the buyer. If the buyer does not make attempts to settle the matter amicably, legal proceedings can be used to recover payments for goods sold and delivered in Singapore. It is, however, prudent to ensure that the buyer has sufficient assets to satisfy the debt before proceedings are initiated.
Singapore is a common law jurisdiction. Its laws are principally governed by Supreme Court of Judicature Acts, State Court Acts, other statutes which have procedural application (or contain procedural provisions), the Rules of Court, practice directions, case law and the court’s inherent powers.
Singapore’s courts comprise State (Subordinate) Courts and the Supreme Court. The Supreme Court is composed of the High Court and the Court of Appeal (the final appellate court). The High Court is a court of first instance, generally used for claims beyond the jurisdiction of the State Courts (although the High Court is a court of unlimited jurisdiction and may hear any claim).
If a defendant fails to enter an appearance or fails to file a defence within the time specified in the writ, the plaintiff may enter default judgment against him. This can be a final judgment or an interlocutory judgment, depending on the nature of the claim.
If the defendant has entered an appearance and filed a defence, but it is clear that the defendant has no real defence to the claim, the plaintiff can apply to court for summary judgment. To avoid summary judgment being entered, the defendant must show that the dispute concerns a triable issue, or that there is some other reason for trial. An application for summary judgment must be filed within 28 days of pleadings being concluded (unless the court orders otherwise).
Enforcement of a Legal Decision
Writs of Execution
A judgment can be enforced by a variety of writs of execution. These include a Writ of Seizure and Sale of movable and immovable property, a Writ of Delivery and a Writ of Distress. These writs authorise court officials to take appropriate measures to give effect to the judgment.
This can be an appropriate solution when the debtor is owed a debt by a third party (the garnishee). When the creditor garnishes the debt, the garnishee must then make payments due to him, rather than to the debtor. To collect these debts, the creditor must first apply for a garnishee order nisi. This can be filed without the involvement of other parties and leads to “show cause” proceedings. If the garnishee confirms that there are monies due and owing to the judgment debtor at this stage, the Registrar may proceed to make the garnishee nisi absolute.
Registration of Judgment
If the creditor is not able to enforce his judgment in Singapore, he may be able to enforce it in a country where the debtor holds assets. This can be done by commencing fresh proceedings, or by registering the Singapore judgment in the foreign country (on the basis of reciprocity of enforcement between the two countries).
Schemes of Arrangement
Schemes of arrangement begin with an application to court, for an order summoning one or more meetings of the creditors, members of the company, or shareholders of the company. If the court agrees to the order, a proposal must then be tabled before the relevant meetings and approved by the requisite majority (unless the court orders otherwise) of the creditors, class of creditors, members or class of members, shareholders, or class of shareholders.
When a company is in financial difficulty but has reasonable prospects of being rehabilitated, or if preserving all or part of its business as a going concern (or even that the interests of creditors would be better served than by resorting to a winding up), the company or its creditors can apply to court for an order that the company be placed under the judicial management of a judicial manager.
If an insolvent company is unable to overcome its difficulties, it can be dissolved. This enables the liquidation of its assets, so that creditors can be repaid, at least in part. This process is known as winding up or liquidation. A healthy company can also be subject to winding up if its members no longer wish the business to continue. When a company is wound up, its assets or proceeds are first used to pay off any creditors. Following this, any balance remaining is distributed pro rata amongst shareholders.