SINGAPORE: According to a recent report highlighted by the Philippine Inquirer, markets in Southeast Asia have outshone their American counterparts since the end of June.
This remarkable performance can be attributed to the growing anticipation of a Federal Reserve pivot, which has led to a weakening of the dollar and a strengthening of Southeast Asian currencies.
The shift in currency dynamics is not the only factor drawing foreign investors to Southeast Asian stocks. The region’s robust economic growth prospects are another compelling reason.
Most Southeast Asian countries are expected to outpace the United States in GDP growth this year and next.
Moreover, Southeast Asia’s lower debt levels and budget deficits than the United States make it a less risky investment destination. In 2023, the US’s debt-to-GDP ratio stood at 123 per cent, more than double that of Southeast Asian countries ranging from 37 per cent to 62 per cent.
Singapore vs. other regions
Singapore‘s economic conditions are often lauded for their stability and robustness, setting it apart as a global economic powerhouse.
According to the U.S. Department of State Investment Climate report, as of 2024, the city-state continues to boast a highly developed free-market economy characterized by low tax rates, minimal market regulation, and a conducive environment for entrepreneurship and innovation.
According to various international rankings, these factors have made Singapore one of the easiest places in the world to do business, as reported by the Economist Intelligence Unit’s (EIU) recent rankings report published by LinkedIn.
Compared to other regions globally, Singapore’s economic conditions are notably more favourable in several aspects.
Its strategic geographical location at the southern tip of the Malay Peninsula makes it a vital maritime hub, facilitating trade and commerce between the East and the West. This has contributed to its status as one of the busiest ports in the world, further bolstering its economy.
Based on a report published by Export Finance (Australian Government), in terms of GDP per capita, Singapore ranks among the highest globally, reflecting a high standard of living and significant wealth accumulation.
This is supported by a highly skilled and educated workforce, which directly results from the country’s investment in education and training.
The government’s commitment to creating a business-friendly environment has also attracted foreign investment, diversified the economy, and made it less vulnerable to external shocks.
However, Singapore’s economic success is not without its challenges. The high cost of living, limited natural resources, and reliance on imports for food and raw materials are ongoing concerns.
Additionally, the country’s small domestic market necessitates a focus on external trade, making it susceptible to global economic fluctuations.
When comparing Singapore to other regions, it’s clear that its economic conditions are superior to many, particularly in terms of economic freedom, innovation, and competitiveness.
While countries in the European Union, North America, and parts of Asia also enjoy strong economies, Singapore’s unique blend of government intervention and free-market policies has allowed it to carve out a niche as a leading global financial centre and a model for economic development.
A promising frontier for investment
As Southeast Asian markets continue to outperform, savvy investors increasingly view the region as a promising frontier for investment opportunities.