For those of a certain age, the phrase “The Road to Singapore” brings back memories of Bob Hope, Bing Crosby and Dorothy Lamour partaking in one of their hilarious and frivolous romps in their successful “Road Pictures” series of movies. In today’s economy, though, there is nothing frivolous about “The Road to Singapore.” In fact, it might more appropriately be called: “Many Roads lead to Singapore” given its importance to the global economy.
Chevy Chase Trust has long found much to like about Singapore. With the world’s 41st largest economy, Singapore is both the 14th largest importer and exporter and is a key gateway for trade in Southeast Asia. Its leading trading partners, receiving over 40% of Singapore’s exports, are China, Hong Kong, Malaysia and Indonesia. Singapore is also a high-income economy with a gross national income of $47,210 per capita, making it the 7th wealthiest country in the world on a per capita GDP basis. It is ranked #1 out of 185 countries in the World Bank’s Doing Business 2013 report and, according to the World Economic Forum, is the world’s second-most competitive economy.
Singapore’s economy has been rebounding swiftly this year. Third quarter GDP growth was 5.8%, following the second quarter’s growth rate of 4.4%. While long known as a trading hub, Singapore’s manufacturing economy is led by electronics, which provides 20% of manufacturing jobs in Singapore and contributed to the manufacturing sector’s growth of 5.5% for the quarter.
In addition to its position as a leading electronics manufacturing center, Singapore is also known as a financial center for Asia. It is the world’s fourth-largest foreign exchange trading center and as the center of gravity for the global economy shifts to Asia, Singapore’s influence in finance will continue to grow. Already, some 4000 Chinese companies have set up shop in Singapore as a launch pad to grow in Southeast Asia.
Unlike the movie, which had its Bob Hope, today’s Singapore has much more than Hope. It has a record of economic success that may continue well into the future and is a road that investors should consider travelling.