Singapore Country Risk Report

Published 27 May 2015 | Quarterly

  • 54 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Singapore Country Risk Report

Core Views

  • Singapore's ongoing restructuring drive continues, with the ruling People's Action Party (PAP) pushing ahead with stricter foreign labour rules despite an increasingly tight labour market. We believe that the tight labour market is acting as a significant headwind to real GDP growth, but do not see the ruling People's Action Party (PAP) easing measures in any significant way ahead of parliamentary elections.

  • The PAP may move to call elections as early as H215 in order to capitalise on positive sentiment surrounding the country's 50 th anniversary since independence, as well as the government's bumper budget for FY2015/16.

Key Forecast Changes

  • Following a deceleration in real GDP growth to 2.9% in 2014, we believe that the economy will cool further to a 2.5% rate of expansion in 2015. Singapore's labour intensive manufacturing industry is losing competitiveness as a result of an extremely tight labour market, and along with a difficult external environment, this will cap growth over the near-term.

Key Risks To Outlook

  • With expectations towards the US Federal Reserve's rate hike timeline becoming increasingly murky, a further weakening in the US economy could solidify the Singapore dollar's Q215 recovery. Such a scenario represents upside risk to our end-2015 SGD forecast of SGD1.3900/USD.

Macroeconomic Forecasts (Singapore 2013-2016)
Indicator 2013 2014e 2015f 2016f
National Sources/BMI
Nominal GDP, USDbn 299.4 294.3 288.8 307.6
Real GDP growth, % y-o-y 4.4 2.9 2.5 3.1
Consumer price inflation, % y-o-y, eop 2.3 -0.1 1.0 2.5
Exchange rate SGD/USD, eop 1.26 1.33 1.39 1.37
Budget balance, % of GDP 1.2 1.3 0.6 0.6
Current account balance, % of GDP 15.5 19.1 19.5 18.1

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Momentum Shifting Back To PAP As Elections Loom
8
Table : Political Over view
8
Long-Term Political Outlook
10
Political Liberalisation Likely To Be Slow Over Next Decade
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Record Labour Market Tightness Crimping Growth Prospects
14
table: Economic Activity
14
Fiscal Policy
16
2015 Budget Achieves Political Goals, But Revenues To Rise
16
table: Fiscal Policy
16
Monetary Policy
17
MAS Policy On A Knife's Edge
17
table: Monetary Policy
18
Exchange Rate Forecast
19
SGD Showing Signs Of Life Following MAS Hold
19
table: Current Account
20
Table: BMI CURRENCY FORECAST
21
Chapter 3: 10-Year Forecast
23
The Singaporean Economy To 2024
23
Solid Growth Trajectory To 2024
23
Table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
Table: Operational Risk
28
Legal Environment
29
Table: Asia - Legal Risk
30
Costs Of Labour
32
Table: Asia - Labour Costs & Flexibility Risks
33
Table : Regulati ons Governing Flexibility of Workforce
34
Table : Average Annual Wages by Sect or
35
Chapter 5: Key Sectors
37
Infrastructure
37
Retail
41
Table: Total Household Spending
43
Table: Retail Sector Spending, % Of Total
44
Table: Retail Sector Spending, % of GDP
44
Other Key Sectors
45
table: Oil & Gas Sector Key Indicators
45
table: Pharma Sector Key Indicators
45
table: Telecoms Sector Key Indicators
46
table: Food & Drink Sector Key Indicators
46
table: Defence & Security Sector Key Indicators
47
table: Autos Sector Key Indicators
47
table: Freight Key Indicators
47
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
EMs Still Slowing
49
Table: Global Assumptions
49
Table : Developed States , Real GDP Growth, %
50
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table : Emergi ng Markets , Real GDP Growth , %
51

The Singapore Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Singapore. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Singapore's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Singapore's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Singapore's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Singapore, including currency volatility, the commodity price boom and protectionist policies.

The Singapore Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Singapore' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Singapore through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Singapore Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Singapore and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Singapore, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Singapore over the next 5-years?

BMI's Singapore country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Singapore Market - Political Strengths, Weaknesses, Opportunities and Threats facing Singapore.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Singapore's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Singapore’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Singapore's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Singapore?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Singapore against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Singapore’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Singapore will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Singapore's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express