The future of Singapore's economy

As Singapore stands on the threshold of a new economic era, the central question is: What must we do today to thrive tomorrow?

- By Khor Hoe Ee

Over the next decade, the global landscape will be shaped by rapid technological advancement, climate change, demographic shifts, geo-economic fragmentation, and geopolitical polarisation.

To remain a leading global hub and a resilient, vibrant society, Singapore must double down on targeted policy innovation, societal adaptability and visionary leadership.

A LEGACY OF REINVENTION Singapore has a long history of transformation. As a small island nation of six million people, its economic ascent has been propelled by strategic location, good governance and pragmatic policymaking.

From a bustling trading post in precolonial times to an independent state in 1965, Singapore swiftly industrialised by attracting foreign direct investment and leveraging low-cost labour for export-oriented growth.

In the 1970s, tightening labour markets and rising wages prompted a shift towards higher-value industries. Economic setbacks followed: oil shocks in 1975 and 1979, and a recession in 1985 due to eroded competitiveness.

Singapore responded decisively, cutting wages and rebounding swiftly. A similar resilience was seen during the Asian financial crisis in 1997-1998, and the global financial crisis a decade later.

Structural reforms in the 2000s diversified the economy into financial and business services, high-tech manufacturing and the biomedical industry.

Despite recent shocks — including economic disruptions due to the Covid-19 pandemic, higher global inflation and interest rates triggered by the war in Ukraine, protectionist trade policies and heightened US-China tensions—Singapore has responded by skillfully leveraging its fiscal buffers to turn adversity into opportunity.

EMBRACING TECHNOLOGICAL TRANSFORMATION Singapore now enters a critical phase of economic restructuring, driven by rapid advances in digitalisation and artificial intelligence (AI).