Early projections for Singapore’s 2023 GDP estimate that the economy will grow from 0.5 to 2.5%, indicating that the national economy will achieve positive growth but progress slower than the 3.6% achieved in 2022.
Given that the wholesale trade segment contributed largely to the economy’s growth in 2022, Singapore is exploring several trade agreements to replicate success this 2023. These agreements are expected to boost the nation’s overall economy while also contributing to the development of its domestic industries.
Exploring the Cross-Country Trade Agreements
Per the MercoPress, Singapore is in talks to enter a Free Trade Agreement (FTA) with the Southern Common Market, more commonly known as Mercosur– a South American trade bloc that consists of Argentina, Brazil, Paraguay, and Uruguay. In 2021, Mercosur exported ~5.9 billion USD worth of products to Singapore.
The potential FTA with the Mercosur is significant as it presents Singapore with the opportunity to strengthen further ties with a trade partner specializing in exporting agricultural and agro-industrial products, a particular area of weakness for the Singaporean market. Moreover, an FTA with Mercosur could potentially facilitate future collaborations with other countries in Southeast Asia, a move that will boost the regional economy.
Other agreements currently being explored will also seek to develop areas relevant to Singapore maintaining a healthy economy. According to Bloomberg, Singapore and the United Kingdom (UK) are in the final stages of negotiating a Green Economy Framework that seeks to boost trade and investment while focusing strictly on the sustainability aspect of these transactions.
In the context of this green accord, several industries will act as key focal points, namely, green finance, energy, transport, and infrastructure. In addition to the green development of these industries, another point of emphasis will be the post-Brexit entry of the UK into Southeast Asia. If successful, this could create a significant positive impact as parties in the UK actively search for investment opportunities, especially since the decision to leave the European Union has not provided the immediate positive impact initially predicted.
Meanwhile, Singapore is also exploring a digital trade agreement with the European Free Trade Association, which consists of Iceland, Liechtenstein, Norway, and Switzerland, per the Straits Times. The digital agreement aims to establish frameworks that strengthen cross-border digital trade, data flow, and the overall shared digital environment. This is promising, given that Singapore and the four European states previously signed a trade pact that removed ~99% of export tariffs between the two parties in 2003– a move that contributed greatly to the economic development of all countries involved.
Further, such an agreement will accelerate the growth of the digital economy, which is essential because the digital transformation of business is expected to continue well into the future. This digital agreement can also serve as a model for other countries to emulate as more and more parties seek to create more business opportunities for enterprises of all sizes, particularly micro, small, and medium-sized enterprises that have difficulty in a digital environment.
As Singapore initiates, finalizes, and ratifies these trade agreements, its national economy will benefit greatly, both in the short- and long-term, as such frameworks will help set a foundation for the years to come. Given that these agreements encompass several industries, investors should have confidence in pursuing business opportunities in Singapore as the holistic development of their domestic markets is being prioritized.
To get insight on other business trends in Asia, subscribe to our newsletter here and check out these reports:
