Singapore continues to show substantial potential for trade growth, according to new research from Standard Chartered Bank (StanChart) released yesterday.
The city state made the list of 20 global markets that are most rapidly improving their individual potential for trade to grow, coming in at 16th place, according to the bank's new Trade20 Index.
The Trade20 study examined 12 metrics across 66 economies, analysing changes across three equally weighted pillars of economic dynamism, trade readiness and export diversity.
The economic dynamism pillar was measured by inward foreign direct investments (FDI), export volume growth and gross domestic product (GDP) growth. Trade readiness refers to the market's foundations to support future trade growth, measured by factors such as the quality of trade and transport infrastructure and ease of doing business, while export diversity was measured by factors such as export count.
Topping the list was Cote d'Ivoire, followed by India, Kenya and China. Hong Kong took 11th place, above Sri Lanka at 14th.
Singapore's ranking in the index was largely thanks to its economic dynamism, amid increasing levels of inward FDI, StanChart said. The Republic had placed fourth in the 2019 world ranking of FDI destinations by the United Nations Conference on Trade and Development.
StanChart noted that the Singapore Government has been expanding the scope of its free trade agreements to keep pace with global developments on issues including e-commerce, intellectual property rights, competition, government procurement and dispute resolution. Ongoing digitalisation efforts are also driving its information and communications sector, while infrastructure improvements underpin investment activity.
Singapore is implementing long-term policies that will put it in a strong position to cope with the uncertainties of escalating trade tensions, said Mr Himanshu Maggo, head of trade product management, transaction banking, Singapore at StanChart.
For one thing, new technology such as the Networked Trade Platform will further improve the market's ease of doing business, Mr Maggo added.
The Singapore Government is also in talks with other governments to create a cross-border innovation platform for small-and medium-sized enterprises (SMEs). Known as Business sans Borders, the platform will allow SMEs around the world to connect easily and digitally with one another to help grow trade in key corridors. Led by the Monetary Authority of Singapore and the Infocomm Media Development Authority, the initiative will use artificial intelligence to help SMEs in internationalisation and digitalisation.
Elsewhere in South-east Asia, Vietnam (which placed sixth on the list), Indonesia (seventh), Thailand (eighth) and the Philippines (20th) likewise have substantial trade growth potential, buoyed by regional deals and liberalising economies.
Vietnam, Indonesia and Thailand performed particularly well in terms of trade readiness. Vietnam and Indonesia scored high marks for that pillar due to improvements to their infrastructure and the ease of doing business, while Thailand's ranking was boosted by its substantial growth in e-commerce.
Meanwhile, the Philippines shone in terms of economic dynamism, driven by its strong export and GDP growth.
These South-east Asian markets, including Singapore, are being propelled by export-oriented manufacturing, growing intra-region trade, strong domestic demand, close trading ties with China, and healthy job markets, StanChart said.
"While they all face the challenges of heightened global uncertainty, they are well placed to benefit if multinationals consider moving their supply chains due to trade tensions elsewhere," it added. "Regional trade deals, infrastructure improvements, and legislative reforms are also promoting increased openness."
In contrast to most traditional trade indices which are based on a market's present performance, the Trade20 Index captures changes over time to reveal the markets that have seen the most improvement in the last decade. This reveals the economies where recent positive developments may point to an acceleration in trade growth potential, StanChart said.
The bank noted that some countries are progressing quickly from a low starting point, while others are moving from an already high starting point. The study does not look at the trade growth potential of each market in absolute terms, but at its individual potential for trade growth relative to its size.
Separately, a Bain & Co report last week warned that South-east Asia would be more vulnerable in the next global downturn than it was during the last financial crisis. Singapore in particular may fare worse than the rest of South-east Asia, as its economy has historically fallen more sharply in a slump, Bain & Co partner Thomas Olsen said.