DBS Group Research has released a comprehensive report forecasting major economic and financial developments for Singapore by 2040. The report highlights robust growth in the nation’s GDP, a strengthening of the Singapore dollar, and a bullish outlook for the Straits Times Index (STI). Analysts say the projections underscore Singapore’s position as a resilient, innovative, and globally connected economy.
Economic Growth: Doubling GDP by 2040
According to DBS, Singapore’s GDP, valued at US$547 billion in 2024, could more than double by 2040, reaching between US$1.2 trillion and US$1.4 trillion. This growth implies an average annual real GDP increase of around 2.3%, surpassing growth rates in many other advanced economies.
Several factors contribute to this expansion. First, disciplined economic policies continue to support long-term stability. Singapore has maintained low inflation, sound fiscal management, and efficient governance. Second, sustained productivity gains across sectors, particularly finance, technology, and logistics, are expected to enhance output. Third, ongoing capital inflows, including foreign direct investments, are likely to provide further momentum. Collectively, these elements position Singapore as a highly dynamic and resilient economy capable of weathering global shocks.
DBS notes that structural reforms, such as investment in technology, research and development, and talent development, will continue to drive growth. The city-state’s focus on innovation in areas like green finance, artificial intelligence, and advanced manufacturing ensures that productivity gains will be sustained over the long term. Analysts emphasize that Singapore’s success relies not only on market-friendly policies but also on its strategic integration into global trade networks and financial markets.
Currency Outlook: Singapore Dollar Approaching Parity with the U.S. Dollar
In addition to GDP growth, DBS forecasts that the Singapore dollar (SGD) may reach parity with the U.S. dollar by 2040. The expected appreciation stems from several key factors.
First, Singapore’s status as a financial hub continues to attract global investments. Multinational firms, sovereign wealth funds, and institutional investors increasingly use Singapore as a regional headquarters and financial base. Second, ongoing productivity improvements across industries enhance economic output and attract capital. Third, Singapore’s current account consistently records a surplus, creating demand for SGD.
Moreover, the nation’s stable political environment and strong regulatory framework give the currency “safe-haven” appeal. Investors seeking security during periods of global uncertainty find Singapore a reliable destination. Consequently, analysts expect that these conditions will continue to strengthen the Singapore dollar over the next two decades, aligning it more closely with the U.S. dollar.
Overall, currency stability reflects Singapore’s sound economic management. Policymakers have historically intervened cautiously in foreign exchange markets, ensuring the SGD maintains competitive strength without undermining export-oriented industries. By 2040, the combination of economic growth, capital inflows, and prudent financial policies could push the currency toward parity, signaling international confidence in Singapore’s economy.
Stock Market Projections: STI Approaching 10,000 Points
The Straits Times Index (STI), Singapore’s benchmark stock market index, has surpassed the 4,000-point mark in 2025, breaking a 17-year consolidation phase. DBS projects that if historical trends continue, the STI could approach 10,000 points by 2040.
This optimistic outlook is supported by multiple factors. Dividend yields in Singapore remain attractive, providing steady returns for investors. Domestic interest rates are low, encouraging investment in equities over fixed-income instruments. Additionally, government measures aim to enhance market liquidity, particularly among small- and mid-cap stocks, which historically experience slower trading.
DBS analysts suggest that market participation by both domestic and foreign investors will likely increase. Policies fostering transparency, corporate governance, and innovation attract long-term investments. Analysts also highlight Singapore’s strategic position as a regional financial hub, which continues to draw capital from neighboring Southeast Asian economies and beyond.
Government Initiatives: S$5 Billion Equity Market Development Program
To support the anticipated growth in the stock market, the Monetary Authority of Singapore (MAS) is advancing a S$5 billion equity market development program. This initiative focuses on improving liquidity and trading activity, especially for small- and mid-cap stocks. By increasing market depth, the program encourages broader participation from institutional and retail investors alike.
The initiative also complements Singapore’s broader economic and financial strategy. Enhancing capital market infrastructure, promoting transparency, and supporting corporate growth create a virtuous cycle of investment and economic expansion. Analysts note that these policies not only improve the domestic investment climate but also reinforce Singapore’s global competitiveness in financial services.
Strategic Vision: Singapore’s Position in the Global Economy
National Development Minister Chee Hong Tat emphasized Singapore’s commitment to remaining open, connected, and competitive. He highlighted the financial sector’s 6.8% growth and the nation’s management of over S$6 trillion in assets as indicators of economic vitality.
DBS CEO Tan Su Shan stressed the importance of maintaining stability while pursuing innovation. According to her, balancing growth with sustainable development is critical for long-term prosperity. Policies supporting clean energy, green finance, and technological advancement are expected to sustain economic growth while addressing environmental challenges.
Singapore’s continued integration into global trade and investment networks is also crucial. Analysts highlight the importance of free trade agreements, regional partnerships, and strategic collaborations with global powers. These linkages allow Singapore to access new markets, attract investment, and diversify economic risk.
Risks and Considerations
While DBS’s projections are optimistic, they are not without risks. Global economic volatility, geopolitical tensions, and climate-related challenges could affect growth trajectories. Additionally, reliance on external capital makes Singapore sensitive to global financial market shifts.
To mitigate these risks, Singapore continues to diversify its economy. Investments in digital infrastructure, renewable energy, biotechnology, and education aim to reduce dependency on any single sector. Policymakers are also focused on strengthening social safety nets and workforce adaptability to maintain stability in uncertain times.
Conclusion
DBS Group Research’s projections present an ambitious but plausible vision for Singapore’s economic future. GDP could more than double by 2040, the Singapore dollar may reach parity with the U.S. dollar, and the STI could approach 10,000 points.
These developments reflect Singapore’s disciplined economic management, commitment to innovation, and global connectivity. Government initiatives, financial market reforms, and sectoral productivity gains all contribute to long-term growth.
As Singapore navigates global economic challenges, balancing stability, innovation, and sustainability will be key to realizing these ambitious goals. The outlook underscores the city-state’s resilience and its capacity to remain a leading global financial and economic hub for decades to come.
