The US economy is generally seen as the engine of growth for the world, including Singapore. As such, a lot of attention has been paid to the health of the US economy, to what may happen to interest rates in the US, and to the direction of the US dollar. Often, negative news pertaining to the US market makes Singaporeans nervous about our economy.That's not surprising given that the US is the world's biggest economy, and the US stock market went through a long bull market in the last two decades. However, is Singapore's economy as dependent on the US as is generally perceived? If the US economy grows at only a modest pace, and Singapore's exports to the US do not grow robustly, can Singapore's economy perform well?
The chart below shows Singapore's non-oil domestic exports (NODX) to the various key markets. It is interesting to note that Singapore's NODX to the US have not grown in the last 9 years. In the meantime, exports to other areas such as China have grown several folds.
Source: Singapore Department of Statistics
In 1994, the US accounted for 29% of Singapore's NODX. That fell to just 17% in 4Q 2003. For China including Hong Kong, the percentage contribution went up from 8% in 1994 to 16% in 4Q 2003. It looks likely that within 2 years from now, China including Hong Kong may emerge as the top destination for Singapore's NODX.
Exports to other Asian countries such as Japan, South Korea and Taiwan have also grown substantially in the last decade, as shown in the chart above. This is despite the fact that Singaporeans have certainly heard more negative news about these countries than they have heard for the US.
The table below shows the contribution that each country/region has made to the growth of Singapore's NODX in the last 9 years. During that period, which was interspersed with some of Singapore's most difficult economic times, Singapore's NODX grew 52%.
Who were the major contributors? Interestingly, (though obvious from the chart above) it was not the US, which contributed none (-1%) of that growth. China turned out to be the key contributor, accounting for 29% of the growth. North Asian countries collectively accounted for more than half of the growth.
% Contribution to growth in S'pore's NODX (Between 1994 and 2003)
Japan, Korea, Taiwan
China incl. HK
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