Future Economy cannot depend on Services sector alone

Majority of Singapore residents are not choosing a career to create products for sale. They rather provide services for a living.

Variables 1980 2015
GDP At 2010 Market Prices  
Goods Producing Industries 30.2% 24.0%
Services Producing Industries 57.4% 67.9%

In 2015, Singapore Gross Domestic Product (GDP) was made of 24.0% in Goods Producing Industries and 67.9% in Services Producing Industries. Back in 1980, 30.2% was in Goods Producing and 57.4% was in Services. Goods producing had declined 6.2 percentage points whilst Services producing jumped 10.5% percentage points over 35 years. There was a hollowing out of our manufacturing base in Singapore over this period.

When there is a global economic downturn, Singapore will be hit when our export of our services slows. The services sector is tied to international trade and wealth of nations. Tourism to Singapore slows during economic downturn leading to poor retail trade, food and beverage, hotel services. Services supporting goods export trade is affected too.

It is not wise that Singapore should reduce goods producing industries further in the future. In fact, we should allow more manufacturing of new products. Diversification of manufacturing capabilities is also key. Singapore should not to be stuck with few key industries such as ship-building, rig-building, oil refining where these industries are now languishing because of falling oil prices.

We would need a trained workforce that can be creative and build products that are demanded by the domestic market and the global markets. This is where entrepreneurship and risk-taking should be encouraged. We have been talking of entrepreneurship and risk-taking for the longest time. It still has yet to bear fruit.

Supplementary Information

See table below for details of both Goods Producing and Services Producing industries.

$ Million
Variables 2015 Proportion (%)
GDP At 2010 Market Prices 391,348.5  
Goods Producing Industries 93,746.7 24.0%
Manufacturing 69,627.2  
Construction 18,640.3  
Utilities 5,338.4  
Other Goods Industries 140.8  
Services Producing Industries 265,869.6 67.9%
Wholesale & Retail Trade 74,445.4  
Transportation & Storage 29,907.1  
Accommodation & Food Services 6,986.5  
Information & Communications 15,557.0  
Finance & Insurance 50,072.7  
Business Services 51,763.0  
Other Services Industries 37,137.9  
Ownership Of Dwellings 13,317.8 3.4%
Gross Value Added At Basic Prices 372,934.1  
Add: Taxes On Products 18,414.4 4.7%

Source: Singapore Department of Statistics

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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