Singapore has a highly developed market-based economy, and is a developed nation. It ranks 25th on the Human Development Index[25] which measures standards of living, and second in the Index of Economic Freedom. Although Singapore has one of the highest per capita gross domestic products (GDP) in the world, domestic demand is relatively low due to the small population. [citation needed] Singapore is also the fourth largest foreign exchange trading centre in the world after London, New York and Tokyo[26].
Singapore has been rated as the best business-friendly economy in the world. According to a World Bank-IFC report, Singapore beats previous winner New Zealand for the top spot in the 2005/2006 rankings while the United States came in third. Within Asia, Hong Kong was Singapore's closest competitor at fifth place. They were evaluated on 10 key parameters that included ease of starting a business, getting licences, sourcing staff, as well as and enforcing contracts. [27]
The economy depends heavily on exports produced from refining imported goods in a form of extended entrepot trade, especially in manufacturing. Manufacturing contributes around 28% to GDP in 2005. The manufacturing industry is today well-diversified with electronics, chemicals, mechanical engineering and biomedical sciences manufacturing. Along with Hong Kong, South Korea and Taiwan, Singapore's fast-paced industrialization earned it a place as one of the four original 'East Asian Tigers'.
In 2001, a global recession and slump in the technology sector caused the GDP to contract by 2.2%. The Economic Review Committee (ERC), set up in December 2001, recommended several policy changes with a view to revitalising the economy. Singapore has since recovered from the recession, largely due to improvements in the world economy; the Singaporean economy itself grew by 8.3% in 2004 and 6.4% in 2005.[28] In the long term, the government hopes to establish a new growth path which will be less vulnerable to the external business cycle, as compared to the current export-led model. However, the government is unlikely to abandon efforts to establish Singapore as Southeast Asia's financial and high-tech hub. The per capita GDP in 2005 was US$26,833[29] and the unemployment rate was 2.8% in June 2006, up from 2.5% in January the same year.[30] 81,500 new jobs were created from January-July 2006, the highest number in a decade within a 6 month period. The economy is expected to grow by 6.9% in the year 2006 as announced by the World Bank, after a strong 9.4% growth in the first half of Year 2006 (Jan-Jul 2006). Initially, Lee Hsien Loong, who is the current Finance and Prime Minister, had only expected growth to be between 3-5% for the whole year.
Singapore introduced a Goods and Services Tax (GST) with an initial rate of 3% on 1 April 1994. This has substantially increased government revenue by $1.6 billion, stabilising the government's finances.[31] The government has used revenue from the GST to reorient the economy around services and value added-goods to reduce dependence on electronics manufacturing. The taxable GST was increased to 4% in 2003 and to 5% in 2004.[32]
Singapore is a popular travel destination, making tourism one of its largest industries. In 2005, a total of 9.05 million tourists visited Singapore. By 2015, Singapore hopes to achieve about 17 million visitor arrivals. In July 2006, a record high of a total of 913,000 visitors arrived in Singapore, mostly due to the Great Singapore Sale. Much of its attraction can be attributed to its cultural diversity that reflects almost 200 years of colonial history with immigrant cultures originating from Chinese, Malay, Indian, Eurasian and Arab ethnicities. The Orchard Road district, which is dominated by multi-storey shopping centres and hotels, is the centre of tourism in Singapore. Other popular tourist attractions include the Singapore Zoo and its Night Safari along with the tourist island of Sentosa. To attract more tourists, the government decided in 2005 to legalise gambling and to allow two Integrated Resorts to be developed at Marina South and Sentosa.[33] Other than the Integrated Resort, many other new developments are coming up that includes the Singapore Flyer and Gardens by the Bay. The government said that there are about 10 developments in Marina Bay currently. There have also been rumours about Singapore being another destination for Disneyland in the Asia after Hong Kong, and it has been named 'Singapore Disneyland'. The site of this theme park would most likely be at Marina Bay. [citation needed]
Food in itself has been heavily promoted as an attraction for tourists, and is usually promoted by various initiatives undertaken by the Singapore Tourism Board or the associations it deals with as one of Singapore's best attractions alongside shopping. The government organises the Singapore Food Festival in July annually to celebrate Singapore's cuisine. The multiculturalism of local food, the ready availability of international cuisine, and their wide range in prices to fit all budgets at all times of the day and year helps create a "food paradise" to rival other contenders claiming the same moniker.