Singapore's Next Phase of Growth Requires a Refreshed Blueprint

New tools will be needed for Singapore to thrive in a world upended by trade shocks and a coming AI disruption.

- Terence Ho

What happens when the formula that has powered Singapore's prosperity for six decades comes under strain?

That is the question facing policymakers today, as globalization frays and artificial intelligence (AI) threatens to upend not just factory floors but white-collar professions too.

On Aug 17, Prime Minister Lawrence Wong's National Day Rally (NDR) speech put it bluntly: Singapore needs "a new economic blueprint - to secure our future in a very different world".

The Singapore Economic Resilience Task Force (SERT) led by Deputy Prime Minister Gan Kim Yong has been tasked with drawing it up. But the outlines of the challenge are already clear.

For decades, the pillars of Singapore's economic approach sufficed: openness to global trade, investment and talent; market competition to spur efficiency; and investments in skills, technology, and innovation. This approach allowed a small country with no natural resources to overcome its constraints of size and manpower and compete in global markets. But two powerful disruptions are now testing the limits of that economic strategy.

TWO SHOCKS

The first is the shift from "peak" globalization to a more fractured and volatile international trading system.

Over the past 60 years, Singapore rode the wave of globalization successfully and embarked on export-oriented industrialization. From its early days as a low-cost manufacturing base for foreign multinationals, Singapore moved up the value chain to take on increasingly complex and higher value-added manufacturing and services, serving as a key node in global production chains. As a small and open economy, our success depended vitally on a predictable rules-based trading system and global markets staying open.