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DBS Group Research, the bank’s award-winning research house, has just released a forecast for Singapore’s economy for the next 15 years: Singapore 2040: The next 15 years of quality and inclusive growth.
So, what’s in store for the city-state? How much wealthier can Singapore become? What should we expect? Well, much stronger currency for one, as SGD has cemented its position as one of the most stable, strong currencies:
“SGD on Track to a World-Beater: Disciplined policy and safe-haven appeal point to a stronger Singapore dollar, consolidating its role as one of the world’s most stable currencies, with the potential to reach parity with the US dollar by 2040.”
By 2040, one Singapore dollar could be worth one US dollar. This would not only make Singaporeans wealthier compared to Americans, as most goods in the city-state are imported and paid for with USD, but also boost exchange rates with neighbouring Southeast Asian nations—especially Malaysia.
Historically, the ringgit has been trailing the SGD, gradually diverging from its original 1:1 exchange rate when it was introduced in 1967, two years after the separation.
Early last year, it crossed historic levels of 1:3.50 vs. SGD and 4.70 against the USD, before settling to a more moderate 3.20 and 4.20, respectively, this year. Even with a weakening USD, the ringgit isn’t a strong currency itself.
In other words, if DBS forecasts are accurate and no ground-breaking reversal of trends happens in the next decade or so, the Singapore dollar should handily be worth RM4 in the not-too-distant future. Given that the ringgit had already once fallen over 4.70 against the US dollar, it’s not unlikely that even higher levels are within reach—especially as it’s hard to expect a fundamental change in how the country is governed.
A trillion-dollar economy
Besides optimistic currency predictions, DBS sees Singapore’s GDP more than doubling from today’s US$547 billion to between US$1.2 and US$1.4 trillion, joining the trillion and over club, which currently has only 21 members (all of which are considerably more populous).
Burgeoning economy could also boost the domestic stock market, pushing the STI index from its current 4,000 points to over 10,000 by 2040:
“The Straits Times Index (STI) has broken a 17-year stalemate, surpassing 4,000 in 2025 and signalling a medium-term bullish shift. Liquidity reforms, global inflows, and the EQDP should lift equity performance. If historical return patterns hold, the STI could rise to nearly 10,000 by 2040.”
Growth is expected to be fuelled by a mix of Singapore’s traditional roles as a global entrepôt and financial hub, and emerging opportunities in digital services, environment, and expanding care economy catering to the needs of an ageing society.
All of them combined are forecast to boost the real average annual growth to 2.3% over the next 15 years—considerably more than in other advanced economies, facing mounting challenges.
Singapore has spent the past six decades catching up to the developed world, closing the gaps each year and growing its GDP per capita by an astonishing 176 times since independence. It seems that the next chapter is going to see it leave the rest of the world—with a few exceptions—behind.
Featured Image Credit: 123RF
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