Impact of US Economy on Singapore Economy


With the concept of global village taking strong roots all over the world, the economies of various countries have been strongly linked together. Economic fluctuations in one country show its influence on many other countries of the world. Such fluctuations in one of the most powerful countries in the world, the United States, send tremors ten thousand miles across the ocean right up to the tiny country Singapore.

When the twin towers of the World Trade Center collapsed in 2000, the GDP of Singapore dipped by almost 6 percent. During the recession period, when the economy of United States fell to the lowest ever in the country’s history, Singapore also bore the brunt of meltdown with its GDP falling 4 to 5 points in 2008. In 2009, the GDP fell 9 points. In 2012, MAS (Monetary Authority of Singapore) announced that the country would experience a 1 percent slump or more depending on the slowdown in China and United States. In any case, the stupendous growth rate which usually exists in Singapore is missing.

In 2002, Singapore and United States signed a deal named United States Singapore Tree Trade Agreement or USFTA. As per this agreement, trade and commerce between the two countries would be carried out at lower tariffs and there would be more leniencies for citizen of Singapore to migrate to US. In 2000, the total trade in Singapore accounted to S$373 billion and United States was the second highest purchaser of Singapore products.

How Singapore Economy is affected



Being a major investment hub of the world, Singapore receives a lot of foreign investments and a major share comes from the United States. In fact, 40 percent of investments in the manufacturing sector of Singapore are from America. In 1999, US investments in Singapore accounted to $20 billion, with a majority of investment being in manufacturing of electronics, chemical industry, oil refining and oil storage. More than fifteen hundred American companies run businesses in Singapore. In 2012, Singapore and United States sat together for Strategic Partnership Dialogue which focused on further strengthening the ties between the two countries and trigger developmental activities in the entire Asia Pacific region. Under the EXBS (Export Control and related Border Security) program, Singapore has received more than $2 million aid from the United States since 2003. In 2012, Singapore received $250,000.

The government of Singapore encourages its citizens to set up businesses outside the country. While China is the leading business destination chosen by many Singapore residents, 4 percent of them went over to the United States. The number steadily increased over the last decade. United States has shown keen interest in strengthening bilateral ties between the two countries in order to aid better trade and commerce. The relation between the two countries began forming right from 1966 when Singapore asserted its independence from Malaysia. Singapore has made a lot of efforts to maintain cooperation with the United States so that the relation is not soured.

There is another major consideration here. Since 1973, Singapore has adopted Managed Float System of economy. Under this system, the currency of Singapore fluctuates within a predetermined undisclosed range. The value is not fixed and so, any change in US dollar reflects immediately with the Singapore dollar. A major chunk of Singapore economy depends on international trade, with United States being the leading partner.

All these facts and statistics only go on to show that the economies of Singapore and United States are deeply interlinked and any problem in the economy of United States impacts Singapore significantly and at the root level.

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