Singapore faces big tests ahead
When Singapore gained independence in 1965 after its separation from Malaysia, few expected the small city-state — which turns 60 on Saturday — to survive. But in the decades since, the country of just 735 square kilometers — smaller than New York City — has transformed itself into one that regularly tops rankings for education , economic growth and safety . More than 50 years ago, it was confronted with high unemployment, poor infrastructure, and an uncertain future. Now, however, the World Bank describes the city-state as being “home to a high-income, globally competitive economy that is underpinned by one of the highest levels of human capital development in the world.” But Singapore’s hot streak raises the question: Can it continue to punch above its weight in the face of an uncertain trade environment and a great power competition between the U.S. and China? Ng Xin-Yao, investment director of Asian equities at Aberdeen Investments, told CNBC that Singapore is facing a global trade system that is “showing cracks and fragmenting.” That threatens trading hubs like Singapore, which benefit from more from globalization. On top of that, Ng said, multilateralism is at risk as bilateral relationships grow in importance. “This puts greater power obviously in the hands of the superpowers, and that disadvantages smaller countries like Singapore,” he said. Singapore Prime Minister Lawrence Wong said in Parliament on April 8, “We are very disappointed by the U.S. move, especially considering the deep and longstanding friendship between our two countries. These are not actions one does to a friend.” Wong was responding to Trump’s “Liberation Day” tariffs, which saw Singapore hit with a 10% levy even though it has a trade deficit with the U.S. and a free trade agreement since 2004. Earlier in 2025, Singapore’s Ministry of Trade and Industry warned that the country was looking at the possibility of zero growth this year, in light of external pressures on its trade-dependent economy. Singapore’s economy has an outsized reliance on exports. In 2024, exports made up 178.8% of its gross domestic product, according to the World Bank. Song Seng Wun, Singapore economic advisor at CGS International, said that Singapore’s lifeblood was and is trade, and must therefore continue to rely on it to prosper. Modern Singapore was founded as a British trading port in 1819. Since then, it has grown to be the world’s second busiest port. Changi Airport is one of Asia’s major aviation hubs, and is the fourth busiest airport in the world in terms of international passengers carried. “Singapore’s heart is all about trade, and the trade links are what drives Singapore’s economy, through its port, through its airport,” Song said. The republic has 28 FTAs , including with the U.S., China and the EU. But as the U.S. upends the global trading system, Song envisions that Singapore would now need a “two-track” trading system, one where it deals with the U.S., and another with the rest of the world. The country is also grappling with an aging population, a high cost of living, and the need to maintain its global competitiveness. Cost of living, availability of public housing, and job security were some of the hot-button issues in the country’s 2025 general election. Singapore’s government has created various programs to help businesses, including a so-called Singapore Economic Resilience Taskforce. Chaired by Deputy Prime Minister Gan Kim Yong, the taskforce aims to help businesses and workers navigate uncertainties arising from U.S. tariffs and related global developments, as well as to position the country to thrive in the new economic landscape. What’s next However, when asked if Singapore needs a new playbook to cope with the changing new environment, CGS’ Song said no. The country, should in fact, continue to double down on this strategy of clean governance and of committing to free trade, he said. More importantly, Singapore has to leverage its reputation of being a safe haven in this uncertain geopolitical environment, he said. “We don’t flip flop on policies, we mean what we say, [and] if there are challenges, we deal with that.” Singapore was rated as one of the best places to do business , with the Economist Intelligence Unit identifying factors such as political stability and the government’s focus on helping domestic private-sector companies upgrade technologically . Tan Su Shan, CEO of Singapore’s DBS Bank, told CNBC, “we remain open … we remain stable, transparent, resilient, but the politics is stable. The markets are open, the rule of law is clear and transparent, and we continue to be a safe and secure financial hub. So long may that continue.” In a paper titled “Singapore at 60,” Morgan Stanley said the country has achieved extraordinary economic success by keeping in sync with global megatrends. In the early years of its independence, Singapore capitalized on manufacturing exports for job creation, inviting companies from around the world to set up manufacturing plants here. Those companies include U.S. IT giant HP (then known as Hewlett-Packard) , Texas Instruments and Japan’s Seiko. “Then it embraced value creation – encouraging innovation and supporting local enterprises to flourish into national, regional and ultimately global champions of industry.” Morgan Stanley said it believes the next step for Singapore story is “wealth creation,” which would involve building on its established brand and economic success to further grow the country’s capital and global financial standing. The city-state should use its “hub status” in areas such as energy, finance and tourism as well as continue to to adopt technological advancements such as artificial intelligence, autonomous vehicles, and humanoids to overcome constraints such as an aging population and to drive significant productivity gains, higher company valuations and potentially initial public offerings, the firm added. The final pillar that Morgan Stanley noted was equity market reform, which saw the country’s monetary authority announce that it will $5 billion Singapore dollars ($3.9 billion) into the local stock markets. Of the SG$5 billion, SG$1.1 billion has been allocated to fund managers to place into small- and mid-cap stocks in Singapore. “We believe this could ignite significant interest and confidence in the Singapore stock market globally,” the investment bank said. Sixty may be a time for most people to slow down, take life easy, and kick back, but not for Singapore, which can hopefully find its place in a new world order.
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