Singapore’s economic growth will be influenced by three major factors: geopolitical tensions, disruptive events, and domestic challenges, said Minister for Trade and Industry Gan Kim Yong during the Ministry’s Economic Dialogue on August 30. The event, held at the Shaw Foundation Alumni House at the National University of Singapore, was themed “Growing Singapore’s Economy Amidst Global Economic Fragmentation and Domestic Challenges.”

Speaking to students about the complexities ahead, Gan highlighted that the global and local economic environment will become more intricate and constrained. He pointed out increasing challenges in conducting international business, emphasizing that global trade is under pressure. Specifically, he mentioned U.S. efforts to tighten export controls on technology like memory chips and chipmaking equipment to China, as well as growing protectionism in sectors such as electric vehicles.

Gan acknowledged that Singapore’s policy of maintaining neutrality has served it well but noted that navigating relations between the U.S. and China is becoming increasingly precarious. Some issues, like climate change, require cooperation between major global players, and recent discussions between the U.S. and China offer some hope of collaboration.

Gan also discussed the rise in state subsidies favoring onshoring and near-shoring, which could divert investment away from Singapore. Additionally, the global introduction of a minimum corporate tax rate will challenge Singapore’s ability to attract foreign investment using tax incentives.

Another significant challenge for Singapore’s long-term planning, according to Gan, is the frequent disruptions in the global environment. He warned that political shifts, especially in regions like Europe and the U.S., could lead to unpredictable changes in climate policies. Technological advances, especially in artificial intelligence, could also reshape entire industries, presenting both opportunities and regulatory challenges.

Domestically, Singapore faces its own constraints. Gan highlighted the slowing growth of the resident workforce, an ageing population, and low fertility rates, which could hinder the country’s economic expansion. He also described decarbonisation as a delicate balance—moving too quickly could make Singapore less competitive, while moving too slowly might compromise the country’s climate commitments.

Despite these challenges, Gan was optimistic about Singapore’s potential to exceed its current growth target of 2 to 3 per cent annually. He outlined three key strategies to achieve higher growth: advancing productivity and innovation, expanding trade through regional agreements and new partnerships, and investing in a skilled, adaptable workforce.

When discussing regional trade, Gan emphasized that the diversity within ASEAN is a strength, offering investors various opportunities. However, he acknowledged the need for member states to progress at different speeds without leaving others behind. He cited the ongoing negotiations of the ASEAN Digital Economy Framework Agreement as an example of this approach, allowing more prepared countries to move ahead while keeping the door open for others to join later.

Gan concluded by highlighting the critical role of economists in shaping long-term strategies, assessing shifts in the global landscape, and advising on policy decisions that account for potential trade-offs.