Economic Survey of Singapore 2012

Balance of Payments

CHAPTER 7

BALANCE OF PAYMENTS
OVERVIEW
Singapores balance of payments surplus rose from $7.8 billion in the third quarter of 2012 to $14
billion in the final quarter, mainly due to a narrower deficit in the capital and financial account. For
the year as a whole, the balance of payments surplus rose to $33 billion, from $21 billion in 2011,
also reflecting a smaller net outflow from the capital and financial account. Singapores official foreign
reserves rose to $317 billion as at the end of 2012, equivalent to 8.0 months of merchandise imports.

CURRENT ACCOUNT

Exhibit 7.1: Current Account Balance

The current account surplus narrowed to $13

billion in the fourth quarter of 2012, from $17
billion in the preceding quarter (Exhibit 7.1). For
the whole of 2012, the current account surplus
fell to $64 billion (19 per cent of GDP), from $82
billion in 2011 (25 per cent of GDP). This was
largely due to the decline in the goods surplus.

$ Billion
22

In the fourth quarter, the surplus in the goods

balance narrowed by $4.4 billion to $16 billion
(Exhibit 7.2). Similarly, a smaller surplus of
$76 billion was recorded for the whole of 2012,
compared to the $91 billion surplus registered in
the previous year, as imports rose while exports
fell.

14

The services account turned from a slight surplus

in the previous quarter to a $0.1 billion deficit in
the fourth quarter. For the full year, the services
surplus narrowed to $0.5 billion, from $0.9 billion
in 2011, mainly as a result of lower net receipts
from maintenance and repair services.
The deficit in the primary income balance declined
to $1.0 billion in the fourth quarter, compared to
$1.6 billion in the preceding quarter. However, for
the full year in 2012, the deficit widened to $3.9
billion, from $2.7 billion in 2011. While income
receipts from residents overseas investments
increased during the year, income payments to
foreign investors rose by a larger magnitude.

30

20
18
16

12
IV
2011

I
2012

II

III

IV

Exhibit 7.2: Components of Current Account

Balance
$ Billion
25
Goods Balance

20
15
10
5

Services Balance
0
Primary Income Balance

-5
IV
2011

I
2012

II

III

IV

MINISTRY OF TRADE AND INDUSTRY

Economic Survey of Singapore 2012

CAPITAL AND FINANCIAL

ACCOUNT
The deficit in the capital and financial account
fell sharply to $0.5 billion in the fourth quarter of
2012, compared to $8.9 billion in the preceding
quarter (Exhibit 7.3). For 2012 as a whole, the
capital and financial account deficit narrowed
to $36 billion (10 per cent of GDP), significantly
below the $56 billion recorded in 2011 (17 per
cent of GDP). This was due to the reversal from
a large net outflow to a small net inflow of
other investment, and an expansion in net
direct investment inflow. Together, this helped to
cushion the increase in net outflows from portfolio
investment and financial derivatives.
Net inflows to the other investment account
surged to $18 billion in the fourth quarter,
increasing from $2.3 billion in the preceding
quarter (Exhibit 7.4). For the full year in 2012,
the account reversed to a $3.9 billion surplus
from the large deficit of $62 billion registered the
year before. This reflected the turnaround from
net outflows to net inflows in the deposit-taking
corporate (banking) sector, as well as smaller net
outflows from the official and non-bank private
sectors during the year.
The direct investment account saw a net inflow of
$10.5 billion in the fourth quarter, down from the
$11.5 billion recorded in the previous quarter. For
the full year, net direct investment inflows rose to
$42 billion from $37 billion in 2011, driven for the
most part by the fall in residents direct investment
abroad while non-residents direct investment in
Singapore increased slightly.

Balance of Payments

Exhibit 7.3: Capital and Financial Account Balance

$ Billion
0
-5
-10
-15
-20
IV
2011

I
2012

II

III

IV

Exhibit 7.4: Components of Financial Account (Net)

$ Billion
20
Direct Investment

10
0
-10
-20
-30

Portfolio
Investment

Other
Investment

Financial
Derivatives

-40
IV
2011

I
2012

II

III

IV

As for portfolio investment, net outflows rose to

$23 billion in the fourth quarter from $17 billion
in the preceding quarter. For the whole year, net
outflows climbed by a steep $45 billion to $61
billion. There were substantial net acquisitions
of overseas debt securities by residents, even as
foreigners purchases of domestic equities rose
during the year.

MINISTRY OF TRADE AND INDUSTRY

31