Foreign Trade

Singapore has one of the most trade-dependent economies in the Asia-Pacific region.
In 2016, exports were the equivalent of 114% of GDP. Such a high export-to-GDP ratio
can be attributed to the fact that the city-state serves as a re-export hub for the region.
Exports (in dollars) fell by 5.5% in 2016 and gains of 8.6% are predicted for 2017 as
Asian demand strengthens. The recovery is driven by the global electronics.
Nevertheless, weaknesses in the Chinese economy will continue to pose a problem for
many of Singapores exporters.
China and the EU-28 are among Singapores top export markets. Together, they
accounted for 21.0% of the total in 2016. Another 12.3% of exports goes to Hong Kong.
Machinery and electrical equipment made up 47.9% of all exports in 2016.
Singapore has concluded free trade agreements with Australia, Japan, New Zealand
and the USA and is negotiating free trade agreements with the Gulf States, Canada,
Chile, China, India, South Korea, Jordan and Sri Lanka. A free trade agreement with the
EU has been negotiated but the European Court of Justice has ruled that it cannot take
effect fully until parliaments in all 28 member states approve it. Finally, Singapore is
expected to become an associate member of the Pacific Alliance which presently
consists of Colombia, Chile, Mexico and Peru.
The current account surplus was 19.1% of GDP in 2016. It will widen to 20.6% in 2017.
The surplus is expected to fall in the medium term as a result of rapid population ageing
and reforms to boost domestic demand.
Chart 3 Total Foreign Trade: 2011-2017

Source: Euromonitor International from national statistics/OECD/IMF

Imports and Exports of Singapore

2016 2016
Major export destinations Share (%) Major import sources Share (%)

Imports (cif) from Asia

Exports (fob) to Asia Pacific 72.8 Pacific 60.7

Exports (fob) to Europe 10.9 Imports (cif) from Europe 16.4

Exports (fob) to North Imports (cif) from North

America 7.1 America 11.2

Imports (cif) from Africa and

Exports (fob) to Australasia 3.3 the Middle East 8.7

Exports (fob) to Africa and Imports (cif) from Latin

the Middle East 3.2 America 1.7

Exports (fob) to Latin Imports (cif) from

America 2.6 Australasia 1.2

IMPORTS
Recovering oil prices could push up outlays on imports
Total goods imports in US$ terms had contracted for three consecutive years by 2016
when they contracted by 5.3% annually, thanks to soft oil prices and declining
manufacturing output. However, the contraction was much lower than 2015s 18.5%,
owing to recovering oil prices since February 2016:
Singapores large re-exports sector, highlights the association of the countrys imports
composition to its exports. Therefore, Machinery and Electrical stood as Singapores
largest import category that accounted for nearly half of total goods imports in 2016;
In 2016, the country imported mineral products worth US$64.6 million. Owing to its lack
of hydrocarbon reserves, Singapore remains dependent on mineral fuels imports for its
energy requirements. However, a significant proportion of its mineral fuels imports is
destined for its petrochemicals and refining industry, thanks to its well-developed
refining, storage and distribution facilities;
Singapore is active in expanding its trade relations in order to support the countrys
trade-dependent economy. In July 2016, free trade agreement (FTA) talks
between Singapore and Sri Lanka were launched. The European Union (EU)-
Singapore FTA has already been concluded, and will come into effect once signed and
approved by the two. Singapore is a part of the Regional Comprehensive Economic
Partnership (RCEP), which is a multilateral trade deal between 16 nations and is
expected to be signed by the end of 2017.
Chart 6 Import Profile of Singapore

EXPORTS
Exports revenue is expected to rebound in 2017
Continued deceleration in China, coupled with lower global demand and re-
export activity caused exports to contract for the third consecutive year by 5.5% (in
US$ terms) annually in 2016:
Singapore has a large electronics industry and is one of the leading providers of oil and
gas drilling parts, making Machinery and electrical, its major export category in 2016;
Singapore is a very open and a competitive economy. This coupled with a favourable
geographical positioning, tariff-free imports and insignificant non-tariff barriers to trade,
has meant it has developed itself as a re-export hub and the second most export-
dependent economy (exports as % of GDP) globally. This leaves the country highly
vulnerable to subdued demand from Asian economies that imported 68.0% of its total
goods exports;
Singapores current account surplus was 19.1% (second highest globally) of GDP in
2016, thanks to huge FDI inflows and interest income from abroad (fetched by its high
savings ratio). An improvement in primary income levels and sizeable decline in imports
caused the countrys current account surplus to rise over 2014-2016.

Chart 7 Export Profile of Singapore