Singapore's economy grew only .05 percent in the first quarter of 2015. This is very weak by Singaporean standards, especially when compared to the 4.9 percent expansion in the fourth quarter of 2014. The news forced economists to lower expectations of Singapore growth for 2015.
Singapore has been a beacon of economic prosperity for the past few decades, but the city-state's economy is beginning to wane. For one thing, the island nation's manufacturing sector has declined for the past few months, which is a core part of the economy. Transportation and wholesale trade are also lagging, including the Singapore export market, falling 9.7 percent in previous months. The drop marks the worst performance for the exports in two years. Overall, economists predict a Singapore growth rate of anywhere between two to four percent in 2015. However, experts expect low oil prices to have a more positive effect on the economy throughout the year.
External Factors at Play
Singapore's success depends on the performance and policies of other nations as well. For instance, China is a major business partner of Singapore, but slowing Chinese growth has lowered demand. In addition, the U.S. Federal Reserve's policies could have a drastic effect on Singapore if interest rate adjustments cause a market disruption.
Singapore's Deeper Problems
Critics note that some of Singapore's laws do more long-term damage by limiting free expression and creativity, stifling the necessary innovation needed to add vibrancy and new dimensions to the economy. Singapore also places restrictions on the media, and the city-state has garnered a reputation for being a nanny state (i.e. chewing gum rules). Singapore is famous for being a centrally planned society steeped in conformity, with little room for originality. However, Singapore is still a magnet for foreign investment, despite the economic setbacks, but entrepreneurs need an open atmosphere that allows them to think outside the box.
Singapore's draconian terrorism laws damage the country's reputation as well. One example is the Internal Security Act, which was a measure meant to combat Communism terrorism when the city-state was part of Malaysia, allowing the government to detain people for as long as two years. The nation's death penalty sentences for drug cases also tarnished the image of Singapore, but the government has signaled willingness to hand down less stringent sentences. Singaporean officials need to make some societal and policy changes to not only better serve their citizens and the economy, but to further integrate Singapore on the world stage.