Singapore has a highly developed market-based economy, based historically on extended trade. Along with Hong Kong, South Korea and Taiwan, Singapore is one of the original Four Asian Tigers. The Singaporean economy is known as one of the freest, most innovative, most competitive, and most business-friendly. The 2011 Index of Economic Freedom ranks Singapore as the second freest economy in the world, behind Hong Kong. According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world, along with New Zealand and the Scandinavian countries.
Singapore is the 14th largest exporter and the 15th largest importer in the world. The country has the highest trade-to-GDP ratio in the world at 407.9 percent, signifying the importance of trade to its economy. The country is currently the only Asian country to have AAA credit ratings from all three major credit rating agencies: Standard & Poor's, Moody's, and Fitch. Singapore attracts a large amount of foreign direct investment as a result of its location, corruption-free environment, skilled workforce, low tax rates and advanced infrastructure. There are more than 7,000 multinational corporations from the United States, Japan, and Europe in Singapore. There are also 1,500 companies from China and 1,500 from India. Foreign firms are found in almost all sectors of the economy. Singapore is also the second largest foreign investor in India. Roughly 44 percent of the Singaporean workforce is made up of non-Singaporeans. Over ten free trade agreements have been signed with other countries and regions.
Singapore also possesses the world's eleventh largest foreign reserves, and is rated top in terms of net international investment position per capita. The currency of Singapore is the Singapore dollar, issued by the Monetary Authority of Singapore. It is interchangeable with the Brunei dollar.
In recent years, the country has been identified as an increasingly popular tax haven for the wealthy due to the low tax rate on personal income, a full tax exemption on income that is generated outside of Singapore and legislation that means that capital gains are also tax exempt. Singapore ranked fifth place on the Tax Justice Network's 2013 Financial Secrecy Index of the world’s top tax havens, scoring narrowly ahead of the United States.
The Singaporean economy depends heavily on exports and refining imported goods, especially in manufacturing, which constituted 27.2% of GDP in 2010 and includes significant electronics, petroleum refining, chemicals, mechanical engineering and biomedical sciences sectors. In 2006 Singapore produced about 10% of the world's foundry wafer output. Despite its small size, Singapore has a diversified economy, a strategy that the government considers vital for growth and stability.
Tourism also forms a large part of the economy, and 10.2 million tourists visited the country in 2007. To attract more tourists, in 2005 the government legalized gambling and allowed two casino resorts (called Integrated Resorts) to be developed. Singapore is promoting itself as a medical tourism hub: about 200,000 foreigners seek medical care there each year, and Singapore medical services aim to serve one million foreign patients annually by 2012 and generate USD 3 billion in revenue. Singapore is an education hub, and many foreign students study in Singapore. Singapore hosted over 80,000 international students in 2006. More than 5,000 Malaysian students cross the Johor–Singapore Causeway every morning with hopes of receiving a better education in Singapore. In 2009, 20% of all students in Singaporean universities were international students. The students were mainly from ASEAN, China and India.
Singapore is a world leader in several economic areas:
The country is the world's fourth leading financial centre, the world's second-biggest casino gambling market, one of the world's top three oil-refining centres, the world's largest oil-rig producer, and a major ship-repairer. The port is one of the five busiest ports in the world. The World Bank has named Singapore as the easiest place in the world to do business and ranks Singapore the world's top logistics hub. It is also the world's fourth largest foreign-exchange trading centre after London, New York and Tokyo.
As a result of the early 2000s recession and a slump in the technology sector, Singapore's GDP contracted by 2.2% in 2001. The Economic Review Committee was set up in December 2001 and recommended several policy changes to revitalize the economy. Singapore has since recovered, due largely to improvements in the world economy; the economy grew by 8.3% in 2004, 6.4% in 2005, and 7.9% in 2006. After a contraction of 0.8% in 2009, the economy recovered in 2010, with GDP growth of 14.5%. Most work in Singapore is in the service sector, which employed 2,151,400 people out of 3,102,500 jobs in December 2010. The percentage of unemployed economically active people above age 15 is about 2%.