Analysis Of Singapore’s External Sources Of Final Demand
This article examines the external sources of final demand for Singapore, derived based on data from the OECD Inter-Country Input-Output (ICIO) tables.
At the overall economy level, external final demand contributed to two-thirds of Singapore’s Gross Domestic Product (GDP) in 2015. The most important final demand markets for Singapore were ASEAN-5 (Malaysia, Indonesia, Philippines, Thailand and Vietnam), the United States (US) and China. While China, ASEAN-5 and India have risen in importance as final demand markets over the years, the advanced economies (e.g., the US, Eurozone and Japan) remain key final demand destinations for Singapore’s exports of goods and services.
At the sectoral level, the reliance on external final demand varies. The manufacturing, transportation & storage and accommodation¹ sectors were the most reliant on external final demand, while sectors such as construction, other services², retail trade and food services catered predominantly to domestic final demand.
Looking ahead, there is a need to continue to closely monitor the changes in final demand drivers in key external markets as well as the shifts in global value chains, given their impact on our exports and hence GDP. Doing so will also allow us to formulate strategies to ensure that we remain plugged into growth opportunities in key final demand markets either directly or via global value chains. For instance, even though the slowdown in investments and increased insourcing of intermediate inputs in China may weigh on Singapore’s goods exports, the shift towards consumption-driven growth in China as well as robust demand prospects in ASEAN-5 and India may present new opportunities for Singapore’s goods and services exporters.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore.
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