Singapore: Political Stability Sustained

Singapore overall country risk rating remains low. Singapore’s political landscape will be stable in the near and medium term, supported by the ruling People’s Action Party’s (PAP) majority in parliament. Although the PAP lost some political hold during the 2020 elections, the technocratic government’s focus on addressing concerns such as inequality, immigration, and talent mismatch will ensure that political stability sustains.  Meanwhile, the political transition from the PAP's "third generation" to the "fourth generation" leadership, led by Lawrence Wong, is anticipated, with the prime minister-in-waiting expected to take over by November 2024. Singapore's ethnic diversity poses a minor risk to political stability, with efforts to increase political representation for minorities. However, the ethnic Chinese majority is expected to remain the dominant political force. The government's cautious approach aims to avoid major unrest, supported by strict local laws on censorship and limitations on public demonstrations. The political violence measure remains low.

In terms of upcoming elections, despite recent political incidents affecting the PAP's support, it is expected to win the next general election in the medium term, albeit with a reduced vote share below 60%. The Workers' Party (WP) is projected to maintain its nine elected seats, while other opposition parties may have a modest chance of entering parliament.  Turning towards Singapore's foreign policy focuses on an open multilateral trading system and maintaining good relations globally. The city-state aims to become a regional carbon-trading hub, launching a carbon-exchange platform and signing agreements with various countries. The country's commitment to open trade includes expanding its network of free-trade agreements and actively pursuing digital economy agreements (DEAs).  This all supports a medium low exchange transfer risk and sovereign non-payment remains medium-low.  In the face of escalating US-China tensions, Singapore is expected to maintain a neutral stance, leaning towards China economically while collaborating with the US and its allies on security matters. The city-state advocates for a more united and integrated Association of Southeast Asian Nations (ASEAN) and aims to address issues like the South China Sea disputes and the humanitarian crisis in Myanmar.  Despite occasional minor disputes, Singapore's diplomatic ties with Malaysia remain generally solid, with discussions about resuming the high-speed railway project between Singapore and Kuala Lumpur.