This disturbing development comes at a time when there is a high demand from businesses and talent to relocate to the city.

Most visas given to foreign professionals, the Employment Permit and S Pass, saw an increase in holder numbers from 323,500 in 2021 to 365,200 in 2022. The region’s business communities are concerned about the rising costs of living and working spaces.

According to a European Chamber of Commerce in Singapore (EuroCham) survey, half of the expats who recently renewed their residential lease experienced rent increases of over 40%, and seven out of ten businesses are prepared to relocate workers if costs don’t decrease.

As per logistics service provider APAC Relocation, the rent increase has caused around 10% of its clientele to move away from Singapore.

Many expats also prefer to downsize from private landed homes and larger condominiums in Singapore’s city centre to smaller apartments and even public housing in the suburbs.

Why Is It Happening?

Singapore and New York have taken the top rank as the most expensive cities in the world to live in. The cost of living is continuing to rise because of the following reasons:

High Inflation

The cost of living has increased significantly in major cities worldwide, including Singapore, due to rising inflation, according to the Economist Intelligence Unit (EIU).

According to the poll, the average cost of products in the world’s largest cities increased by 8.1% this year in local currency. In 2021, the price increase was 3.5%, for comparison.

This rate is the highest in at least 20 years. According to EIU, gasoline costs have grown the fastest, but utility and food prices have risen significantly.

Singapore’s core inflation fell to 5% year-on-year in March 2023, the first time it has slowed since October 2022, but worries remain as the Monetary Authority of Singapore and the Ministry of Trade and Industry noted the overall high core inflation ratio, which would maintain a strong trajectory in days ahead.

“On the domestic front, unit labour costs are expected to increase further in the near term; and businesses could continue to pass through accumulated such costs to consumer prices albeit at a more moderate pace,” the departments predicted.

Car and accommodation cost increases are also likely to stay firm in the months ahead. For 2023, headline and core inflation are projected to average 5.5 to 6.5% and 3.5 to 4.5%, respectively.

The Singapore Dollar Is Robust

A stronger currency tends to boost a city’s rating as prices are greater when represented in international common currency. EIU transforms prices in local currencies into US dollars to determine each city’s index. Exchange rates vs. the dollar also influence the rankings. Due to its strong currency, Singapore typically ranks highly on the EIU’s index.

Ukraine War, COVID & Trade Disruptions

Food and home products inflation has been high amid trade restrictions brought on in part by the conflict in Ukraine. In addition, the EIU observed that gasoline prices had increased at the fastest rates.

Because of rising international oil costs and a stronger US dollar, the average price of a litre of gasoline has increased by 22% on an annual basis in local currency.

Due to its open economy, Singapore is not immune to problems with international trade. For instance, in 2022 June, fuel pump prices crossed the S$4.00 mark for the first time due to discussions about a ban on Russian oil and increasing post-pandemic demand from economies.

In the 172 cities surveyed, utility costs for electricity and gas increased by an average of 11% in local currency due to the high cost of energy commodities.

Exorbitant Discretionary Purchases

Due to severe government restrictions on the number of cars, Singapore has the highest transportation costs in the world, claims EIU. Clothing, alcohol, and tobacco are also among the most expensive commodities in this city.

A Singaporean who desires a more upscale way of life must spend money on such things.

A DBS survey indicated that Singapore’s discretionary expenditure had increased over 2022. More individuals spent money on entertainment, travel, food, and alcohol, which could have raised prices due to increased demand.

The State’s Reaction

According to Albert Tsui, executive director of advocacy and policy at the Singapore Corporate Federation, supply chain interruptions, inflation, and rising rents have all increased corporate costs.

However, Tsui told Aljazeera that while growing expenses would reduce Singapore’s allure, businesses know that many factors are considered when choosing where to invest.

Tsui remarked that easy access to international talent, solid infrastructure, and institutions that can preserve the value of corporate assets continue to set Singapore apart.

Singapore’s stable political and pro-business environment also encourages business sustainability, making it still a desirable location.

The government has emphasized actively watching the property market, including the residential rental sector, in response to worries that rising rents may make Singapore less attractive to foreign talent.

In response to parliamentary inquiries in November 2022, National Development Minister Desmond Lee stated that “global talents consider many factors besides rental prices when making relocation decisions.”

These include Singapore’s status as a centre for international commerce, its robust external connectivity, solid trade ties, and high standards for healthcare and education. However, the circumstances have made it challenging for many foreigners to remain.

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Construction activities in Singapore decreased by 44.7 percent in the third quarter of 2020 when compared to the same period in 2019. The drop is mainly due to sluggish resumption of activities due to safe management measures.

The retail sector in Singapore also underperformed. It recorded a drop in retail sales in August by 6 percent. F&B Services Index went down 3 percent in August from July figures but recovered 29 percent in July when compared to June.

The SGX report further revealed that when it comes to employment, most jobs are created in the information and communications, food services, professional services, healthcare, finance and the insurance sector.

The Monetary Authority of Singapore(MAS) last month through a survey forecasted that Singapore’s GDP will contract by 6 percent in 2020. In an earlier survey carried out in the month of June, MAS forecasted Singapore’s GDP to contract by 5.8 percent this year.

The Singapore Business Review reported that based on the survey’s mean probability distribution, the most likely outcome is for the economy to shrink by 5.1 to 7.1 percent in 2020. This accelerated from the earlier estimates of -6 percent to -4.1 percent.

The survey further reveals that the GDP will grow next year despite a contraction this year due to the coronavirus pandemic.

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In an earlier survey carried out in the month of June, Singapore’s GDP was expected to
contract by 5.8 percent this year.

The Singapore Business Review reported that based on the survey’s mean probability
distribution, the most likely outcome is for the economy to shrink by 5.1 to 7.1 percent
in 2020. This accelerated from the earlier estimates of -6 percent to -4.1 percent.

The survey further reveals that the GDP will grow next year despite a contraction this
year due to the coronavirus pandemic.

Singapore’s GDP is to grow by 5.5 percent next year. The respondents that participated
in the survey carried out by MAS estimates that the economy is most likely to grow by 4
percent to 5.9 percent in 2021.

In the second quarter, GDP contracted by 12.6 percent year-on-year, according to the
Ministry of Trade and Industry.

It is also 8 percentage points higher than the 11.8 percent contraction expected by the
Monetary Authority of Singapore (MAS).

On a quarterly basis, the economy shrank by 41.2 percent.

It possibly marked the start of a recession for Singapore.

On the positive side, the manufacturing sector grew by 2.5 percent year-on-year in the
second quarter. However, the growth rate is much smaller when we compare it to the
8.2 percent growth the sector achieved during the previous quarter.

The post Singapore’s GDP to decline by 6% in 2020, survey reveals appeared first on International Finance.

It is also 8 percentage points higher than the 11.8 percent contraction expected by the Monetary Authority of Singapore (MAS).

On a quarterly basis, the economy shrank by 41.2 percent.

This could possibly mark the start of a recession for Singapore.

On the positive side, the manufacturing sector grew by 2.5 percent year-on-year in the second quarter. However, the growth rate is much smaller when we compare it to the 8.2 percent growth the sector achieved during the previous quarter.

Furthermore, the construction sector contracted by 54.7 percent year-on-year in the second quarter, a significant deterioration from the 1.1 percent dip in the first quarter.

Last week, a report by United Overseas Bank (UOB) forecasted that Singapore’s gross domestic product in the second quarter of 2020 may contract by 34.6 percent if we compare it to the first quarter.

Barnabas Gan, an economist at UOB said, “We note that the uncertainty surrounding the length and severity of COVID-19, as well as the emergence of renewed US-China tensions continue to cloud Singapore’s trade prospects. Collectively, the quick deterioration of economic prospects both globally and domestically is expected to weaken Singapore’s labour market.”

According to the ministry of labour, the unemployment rate in Singapore also increased to 2.4 percent in the first quarter.

According to economists and analysts polled in a survey by the Monetary Authority of Singapore (MAS) last month, its economy is expected to contract by 5.8 percent this year.

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Singapore’s gross domestic product (GDP) in the second quarter of 2020 may contract by 34.6 percent if we compare it to the first quarter, according to a report by UOB.

Singapore’s second quarter GDP will contract by 10.5 percent when compared to the same period in 2019.

For Singapore, this could possibly mark the start of a recession.

Barnabas Gan,  an economist at UOB said, “We note that the uncertainty surrounding the length and severity of COVID-19, as well as the emergence of renewed US-China tensions continue to cloud Singapore’s trade prospects. Collectively, the quick deterioration of economic prospects both globally and domestically is expected to weaken Singapore’s labour market.”

According to the ministry of labour, the unemployment rate in Singapore also increased to 2.4 percent in the first quarter.

According to economists and analysts polled in a survey by the Monetary Authority of Singapore (MAS) last month, its economy is expected to contract by 5.8 percent this year.

In a similar survey carried out by the central bank earlier, the participants predicted a growth rate of 0.6 percent for Singapore.

The forecast comes as survey respondents cited an escalation in the COVID-19 pandemic as a key downside risk to Singapore’s growth outlook.

The contractions are mainly attributed to the coronavirus pandemic which has pushed the global economy into recession.

In Singapore, the lockdown measures introduced to curb the spread of the virus has also affected the city-state severely. When it comes to the construction sector, the MAS survey forecasts that it will contract 11.4 percent this year.

Private consumption is expected to contract by 5.2 percent.

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