Worldbox Country Risk Climate – April 2025
SINGAPORE
Summary
NEW – Technology is an increasingly important driver of economic success, and we are now including a separate Technology sector in our quarterly country risk reports and integrating the core into our overall score.
| Overall Risk Score 34 (Stable)
Political risk: Stable 9/10 Economic risk: Stable 8/10 Commercial risk: Stable 9/10 Technology risk: Stable 8/10 The risk assessment of a country is made up of four components, being Political, Economic, Commercial and Technological. Each component is scored out of 10 with 1 being the highest risk and 10 the lowest. |
ESG Risk: 8/10 (Stable)*
*Environmental, social and governance (ESG) issues are becoming increasingly important to companies, investors and consumers in Southeast Asia. That is why we are now preparing a separate ESG score and section with our quarterly country risk reports. We explain how each country rates, looking at the E, S and G individually, and outline recent developments. |
Political Risk – Stable at 9
Singapore is one of Southeast Asia’s most stable and prosperous countries. The electoral and legal framework allows for some political pluralism but constrains the activities of opposition parties and limits freedoms of expression, assembly and association. The media environment is controlled and self-censorship among journalists is common. There are also curbs on online content. The People’s Action Party (PAP) has ruled the country since it split from Malaysia in 1965.
Lawrence Wong became prime minister on 15 May 2024, succeeding Lee Hsien Loong, the eldest son of the country’s founding father, Lee Kuan Yew. Wong, the former deputy prime minister, became the fourth leader of Singapore since independence. Aged 52, he is only Singapore’s second leader not to come from the Lee family, after Goh Chok Tong, who governed between 1990 and 2004.
Wong will lead the PAP into the country’s next general election, which is due to take place on May 3rd 2025. Wong won praise for his handling of the government’s response to the Covid-19 pandemic.
The East Asia Forum describes Wong as the protégé of Lee Hsien Loong, having worked closely with Lee as his Principal Private Secretary for three years. Since stepping up as prime minister, Wong has indicated that he wants to make changes, but this will not be easy while Lee Hsien Loong continues to sit in Cabinet as Senior Minister, the East Asia Forum says.
Economic Risk – Stable at 8
Singapore is a high-income economy built on a business-friendly regulatory environment and strong investments in infrastructure, education, healthcare and public services. The city-state is among the world’s most competitive economies, according to the World Bank. Political stability, low corruption rates and transparent public institutions have underpinned its growth as a leading business and financial hub in Asia.
The economy is heavily trade-dependent and has an open investment regime, with some licensing restrictions in the financial services, professional services and media sectors. The government is committed to maintaining a free market but also actively plans Singapore’s economic development, including through a network of state-owned enterprises.
Following independence in 1965, the economy experienced rapid industrialization in the 1960s, with manufacturing emerging as the main driver of growth. The manufacturing and services sectors remain the twin pillars of Singapore’s high-value-added economy.
Manufacturing is increasingly hi-tech: the country is the world’s fifth-largest exporter of hi-tech products in sectors such as semiconductors, pharmaceuticals, medical and aerospace engineering. Electronics account for close to half of the manufacturing sector’s output, with semiconductors being particularly important.
The government actively promotes the country as a centre for research, development and innovation by offering tax incentives, research grants and partnership opportunities with domestic research agencies. Singapore remains a regional hub for thousands of multinational companies and maintains its reputation as a world leader in dispute resolution, financing and project facilitation for regional infrastructure development.
The country is also an important global maritime and aviation hub, and claims to have the best seaport in Asia, while Changi Airport is routinely voted as being among the best in the world. Singapore is home to the world’s largest transshipment container port, linked to over 600 ports worldwide.
A January 2025 report from the ASEAN+3 Macroeconomic Research Office (AMRO) supported the government’s key priorities in fostering a more productivity-driven economy and equitable society through growth-enhancing fiscal spending. The organisation AMRO welcomed progress in enhancing labour market resilience by providing financial support scheme for involuntarily unemployed workers, promoting flexible work arrangements, and adopting measures to support productive aging. AMRO added that the authorities should continue with their efforts on green transition and with the programme of reskilling and upskilling the workforce to strengthen Singapore’s competitiveness.
Commercial Risk – Stable at 9
Singapore consistently ranks as one of the best economies in the world in which to operate. The country ranks in first place in terms of economic freedom out of 184 countries, according to the Heritage Foundation 2025 Index of Economic Freedom. In its 2025 report on Singapore, Freedom House said that:
“Strong protection of property rights and effective enforcement of anticorruption laws sustain the foundations of Singapore’s economic freedom. Tax rates are competitive, and the regulatory environment encourages vibrant economic activity. Openness to global commerce boosts productivity and facilitates the emergence of a more dynamic and competitive financial sector. The business start-up process is straightforward. There is no statutory minimum wage, but the National Wage Council guides wage adjustments. Inflation is under control despite the challenging external environment.”
Singapore is also consistently rated as one of the least corrupt societies in the world, ranking third in Transparency International’s (TI) 2024 Corruption Perceptions Index, up two places from the previous year. It is the only Asian country ranked in the top 10. Singapore has tackled corruption decisively and garnered international recognition for its incorruptibility and clean public sector, according to TI.
Singapore benefits from excellent infrastructure, reflecting high levels of investment supported by years of political stability and economic prosperity. The country hosts superb transport links, for example, and its nationwide fibre network provides its citizens with among the fastest home internet speeds in the world.
Singapore is consistently regarded as the “smartest” city in Asia. For example, the 2024 Smart City Index ranked Singapore as the smartest city in the region, ahead of Beijing, Taipei and Seoul, and as the world’s fifth-smartest city. The report found that Singapore was excelling in areas like providing satisfactory basic sanitation for the poorest areas, public transport and public safety.
NEW
Technology Risk – Stable at 8
The Global Innovation Index (GII), from the World Intellectual Property Organization, is an important index used by countries and multinational companies to assess innovation ecosystems and aid in policymaking and investment decisions.
Singapore ranks fourth out of 133 countries in the 2024 GII – moving up from 15th place in 2020. Singapore ranks fourth among the 51 high-income group economies, and first among the 17 economies in South East Asia, East Asia and Oceania.
Over the last decade, Singapore has grown into one of the largest tech startup clusters in Asia, home to around 4500 young ventures and over 400 venture-capital firms, with a scientific research base of nearly 40,000 researchers, scientists and engineers, according to Nikkei Asia, quoting Startup Genome. The country’s strong talent base, convenient location, government support and favourable tax policies have been credited for Singapore’s rise.
Singapore is investing heavily in automation, AI and integrated systems, as well as sustainability, and is seeking to establish itself as a regional hub for these technologies. Singapore is also a well-established hub for medical research and device manufacturing.
Government policies
Singapore’s policymakers have played a significant role in helping the state transition into a high-income economy in less than 40 years, according to the UN’s World Intellectual Property Organization (WIPO).
WIPO says the policies can be summarized into two categories:
- Supply-push innovation policies – these intend to build the infrastructure and make investments that stimulate innovations.
- Demand-pull innovation policies – these intend to facilitate the adoption of new products and services to mitigate the risk of developing them.
WIPO adds that key public spending on critical infrastructure, such as Singapore’s smart-city infrastructure and healthcare, contributed to the growth in innovative activities by indigenous startups. In addition, public investment in education, and in research and development, contributed to the state’s strong reputation in regional and international research, with two universities ranking as first and second in Asia in 2019 and 2020.
The government has also been instrumental in providing the demand for Singaporean-led technological innovations, according to WIPO. It explains that the government is an early adopter of relatively unproven new technologies or novel forms of services in sectors such as mobility, energy and, more recently, public healthcare during the Covid-19 crisis. Because of this, several inventions became viable commercial innovations that have broadly diffused to the private sector, says WIPO.
WIPO also believes one crucial element of Singaporean public policies is the state’s innovation-friendly environment. Local innovators are able to rely on the support of specialized institutions to scale up their startups. These services encourage commercial efforts by making it easier for entrepreneurs to understand matters related to intellectual property protection, venture capital, mergers and acquisitions, or initial public offering.
Infrastructure
Singapore’s infrastructure ranks among the best in the world. It has one of the most reliable electricity supplies globally, for example, with an average interruption time of less than one minute per customer per year. The country is ranked first in Asia for ICT infrastructure, according to INSEAD, The Global Talent Competitiveness Index 2022. It has the fastest fixed-broadband speed in the world, according to Speedtest, and the fastest download (87.1 Mbps) and upload (14.9 Mbps) speeds in Southeast Asia, according to Opensignal’s Global Mobile Network Experience Awards 2023. Singapore is also one of the biggest data-centre markets in Asia and one of the top submarine-cable hubs globally, with connections to 25 active subsea cables and more to come.
Education and skilled staff
Education in Singapore is seen as being among the best in the world. Singapore was ranked number one for mathematics, science and reading in the OECD’s Programme for International Student Assessment (Pisa) 2022. The National University of Singapore ranked in third place globally for interdisciplinary science in a Times Higher Education review published in November 2024, and is highest ranked in Asia. Nanyang Technological University is in ninth position.
April Bulletin
Political Risk – Stable at 9
The general election will be held this week, May 3rd, 2025. An article in CNA, an English language Asian news network based in Singapore states that Wong faces rising pressure not just from a more vocal opposition but also from within the establishment. Wong is seeking to woo voters concerned about cost-of-living pressures with shopping vouchers, subsidies and cash handouts. A generally-supportive mainstream media and a fragmented and under-resourced opposition will also favour PAP.
The ruling PAP would win around 40% of the vote in the election, according to the results of a YouGov survey published in April. Around 12% of respondents said they would pick the Workers’ Party, the leading opposition group. The Singapore People’s Party, Singapore Democratic Party, National Solidarity Party and Progress Singapore Party would each garner 1% of the votes, according to the poll conducted from 25th March to 1st April. A further 29% would rather not disclose their preference and another 13% were undecided on their party of choice. The PAP is the only political group that has ruled Singapore since it gained independence in 1965, winning every election with ease.
The other main challenges facing Lawrence Wong include balancing Singapore’s close relations with both China and the US, a difficult task given that the two powers are battling for influence in the region, amid escalating tensions over Taiwan. However, Singapore could have a major role to play in defusing such tensions. That’s because, despite its friendly ties with China, Singapore continues to retain close, albeit unofficial, relations with Taiwan.
Economic Risk – Stable at 8
Singapore escaped relatively lightly from the Trump administration’s rollout of global tariffs on 2nd April, later delayed for 90 days. Trump imposed 10% tariffs on Singapore, while placing much higher tariffs on the likes of Cambodia (49%), Vietnam (46%), Thailand (36%) and Indonesia (32%). However, given the open-trade-dependent nature of the Singaporean economy, clearly the worldwide tariffs could pose a significant threat to Singapore’s growth prospects depending on long they are in place.
The likelihood is that the tariffs are a negotiating stance and are likely fall away in the coming months, so while the economy will undoubtedly suffer a short-term hit, the hope is that the country’s long-term prospects will not be affected.
The relatively low nature of the tariff placed on the island republic reflects the fact that Singapore is the only country in Southeast Asia with which the US has a trade surplus. However, the US could still impose sector-specific tariffs, such as on pharmaceuticals or semiconductors, which would have a particular impact on Singapore.
The economy exceeded expectations in 2024, with GDP growing by 4.4% according to government data released in February. The economy expanded by 4.3% in the final quarter of 2024, lifting full-year growth to its strongest performance since 2011, excluding the post-pandemic rebound in 2021. Manufacturing, a major driver of the export-reliant economy, expanded by 4.2% in the last quarter of the year, while construction and services grew by 5.9% and 4.3% respectively.
Growth has already softened in early 2025, with key sectors such as manufacturing, trade and logistics slowing down, reflecting uncertainty around the US’s tariff policy under President Trump. Following the announcement of broad US tariffs on 2nd April, OCBC has said tariffs may result in knock-on implications on Singapore’s shipping, logistics and financial hub activities. If China and Southeast Asian countries see slower trade and economic growth, Singapore will suffer, OSBC explained.
Investment into Singapore may also be affected, according to Oxford Economics, pointing to tariffs impacting trade and business decisions. The volume of trade going through Singapore may be reduced as the demand for goods from countries with high tariffs falls. US demand for Singapore goods would also decline
However, there may be silver linings for Singapore, according to the Straits Times. It quoted Oxford Economics as also saying that with tariffs on Singapore goods remaining relatively low, the country could emerge as a more attractive source of imports for US buyers seeking alternatives to heavily taxed suppliers.
Moreover, trade may be rerouted to Singapore to avoid countries that face high tariffs. Chinese exports used to be rerouted to Vietnam before being shipped to the US, explains Oxford Economics. Since Vietnam now faces a tariff of 46%, Chinese exports may be rerouted to Singapore instead.
Overall, however, growth is expected to slow in 2025. Prior to the imposition of tariffs, the economy was forecast to grow by between 1% and 3% in 2025, after growth of 4.4% last year. In April, officials said they were redrawing the country’s growth forecast. Worldbox Business Intelligence has halved its growth forecast for the economy to 2% from 4%.
Singapore’s annual inflation rate fell to 0.9% year on year in February, the slowest growth in four years. In January, the central eased monetary policy for the first time since 2020, citing a faster than expected decline in inflation and a growth slowdown.
The central bank uses the exchange rate as its key policy tool, reflecting the fact that international trade flows dwarf the island nation’s domestic activity. Consequently, the Singapore dollar operates under a managed float-currency regime, based on a basket of currencies representing the city-state’s major trade partners. The rate is allowed to trade within an undisclosed band.
Commercial Risk – Stable at 9
In its July 2024 Article IV assessment of Singapore’s economy, the IMF said that the financial sector remains sound, with solid capital and liquidity buffers, while adding that vigilance against potential vulnerabilities remains important. It also stressed that the tight macroprudential policy stance is appropriate and should be maintained to prevent the buildup of systemic risks from the housing market. The IMF urged the authorities to continue monitoring banks’ cross-border and foreign-exchange exposures, the small segment of highly leveraged corporates and households, and the linkages between non-bank financial institutions and banks.
Singapore’s largest banks are likely to face pressure on margins as the global interest-rate cycle eases, but they are poised to sustain steady net incomes as the country continues to attract global capital, according to a report from the ratings agency S&P Global, released in January 2025. Overall, the agency said that Singapore’s banks are likely to sustain their profits and performance in 2025.
Technology Risk – Stable at 8
The banking industry faces a new era of volatility and uncertainty in 2025 as credit risk looms large amidst geopolitical tensions and the squeeze of inflation while regulatory change and complexity abound, according to a report from FT Longitude and SAS. Consequently, investment in risk technology is likely to grow significantly in Singapore and elsewhere. The report found that 80% of Singapore banks surveyed anticipate increasing risk technology infrastructure investment.
Environmental, Social and Governance (ESG) – Stable at 8
The United Nations’ Sustainable Development Goals (SDGs) are recognized as a beneficial framework for responsible investment. The Sustainable Development Report from Cambridge University Press assesses the progress of all 193 UN Member States on the SDGs. It provides a useful means of ranking Southeast Asian countries on their ESG progress.
Singapore is ranked 65 out of 193 in the 2024 report, with a score of 71.4. Singapore has the highest score in the ASEAN region, a reflection of the country’s advanced economy, the rule of law and the increasing attention paid to ESG issues by the authorities.
Environment – Singapore is a liveable and sustainable city, with clean air and a generally healthy environment, a robust and diversified supply of water, green spaces and a highly efficient public transport network.
The government’s Singapore Green Plan 2030 sets ambitious targets to improve the environment and place the city on course to reach its net-zero target by 2050. Goals include developing over 130 hectares (ha) of new parks, and enhancing around 170 ha of existing parks with more lush vegetation and natural landscapes by 2026. The plan also calls for a doubling of the annual tree-planting rate between 2020 and 2030, to plant 1 million more trees across Singapore.
Social – Singapore would be rated higher but for concerns around social issues such as workers’ rights and political freedom in areas such as expression, assembly and association. Independent news sites face challenges when operating in the country. However, the government provides excellent social housing at relatively low cost; in 2022, 77% of the resident population lived in public housing provided by the Housing and Development Board. In addition, most people work 40 to 50 hours a week and enjoy very high living standards and good pension provision. Singapore, with its very low crime rate, is one of the safest countries in the world in which to live, and educational standards are also very high.
Governance – This is another area where Singapore scores highly. The country’s success as a global commercial and financial hub is based on its willingness to embrace international standards, especially in corporate law and capital markets regulation. The authorities have updated their corporate governance code several times over the past 20 years and are moving from a voluntary “comply-or-explain” approach to a partially mandatory one.Moreover, the Heritage Foundation in its 2025 report on economic freedom says that “the overall rule of law is well respected in Singapore. The country’s property rights score is above the world average; its judicial effectiveness score is above the world average; and its government integrity score is above the world average.”
April Bulletin
Environmental, Social and Governance (ESG) – Stable at 8
Singapore is an early adopter of sustainability despite making up less than 0.1% of total global emissions, according to a report published in April by Maybank. The study found that Singapore’s emissions grew at a slower rate than its GDP growth “due to its pragmatic policy of supporting fuel switch to gas/renewables from oil and boosting sustainable transport”. The country is also a hub for arranging sustainable finance and is gearing up to decarbonise its building stock by 2030, shifting its data centres on renewable energy through imports and phasing out cars running on liquid fuel by 2040.
Latest economic data
f forecasts
* Worldbox Business Information forecast
Source: IMF article IV assessment July 2024
Useful Links
https://www.transparency.org/en/cpi/2021
https://www.imf.org/en/Countries/SGP
https://www.straitstimes.com/global
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