DBS predicts SGD to equal USD by 2040 & GDP to double in size

Singapore’s economy is set for major growth over the next 15 years, and its currency could one day possibly match the strength of the US dollar (USD).

In a new report, DBS Group Research predicts that the Singapore dollar (SGD) exchange rate against the USD is expected to reach 1 to 1 before 2040, according to Reuters.

The bank also expects Singapore’s gross domestic product (GDP) to more than double to between US$1.2 trillion and US$1.4 trillion, up from about US$547 billion in 2024.

At the same time, Singapore’s benchmark Straits Times Index (STI) could climb to nearly 10,000 points, which is more than double its current level.

Growth driven by productivity and capital inflows

DBS analysts say the projections are based on Singapore’s history of steady economic expansion and its reputation as a safe and well-managed financial hub.

They expect the economy to grow by an average of 2.3 per cent annually over the next 15 years — faster than most advanced economies, powered by gains in productivity, skilled labour and continued foreign investment.

“A potentially weaker US dollar, steady productivity-led growth, safe-haven capital inflows, and a sustained current account surplus form the foundation for long-term appreciation,” said DBS economists Taimur Baig, Philip Wee and Chua Han Teng, according to The Edge Singapore.

Services to lead the charge

From 2025 to 2040, the services sector is estimated to play a much greater role in Singapore’s economic output.

The DBS report said it is expected to contribute nearly 74 per cent of Singapore’s nominal gross value-added, as reported by The Edge Singapore.

Manufacturing and construction will also continue to play key roles through large infrastructure projects such as Tuas Port, Changi Airport Terminal 5, and new housing and transport developments.

The Monetary Authority of Singapore (MAS) is also working to deepen local capital markets through its S$5 billion equity market development programme, aimed at boosting liquidity in smaller stocks and attracting more investors.

Government urges continued adaptation

In a speech at a DBS event on Oct. 22, National Development Minister Chee Hong Tat, who is also Deputy Chairman of MAS, said Singapore must stay flexible in a changing world.

“Singapore is well-positioned to be a trusted hub and gateway to ASEAN to support the region’s growth,” he said.

“To play this important role, we need to maintain our economic competitiveness, remain open to global talent and capital, and stay connected with the world

“By trimming our sails wisely, we can harness the winds of change and turn headwinds into tailwinds. We will stay open, stay connected, and stay competitive.”

Top images via Pixabay, Mothership