How Singapore Recovered from the Economic Impact of Asia’s Delayed Borders Openings

At the start of 2022, when much of the world had fully re-opened its borders to vaccinated travelers following the COVID-19 pandemic, the Asia Pacific region remained a “last man standing” with closed borders and strict entry rules even for returning nationals. Vietnam’s re-opening in March 2022 gave hope to an impending rebirth of the regional travel sector. Still, it wasn’t until September 2022 that most APAC countries except China were back in business. 

The delay made a significant impact on the regional tourism and hospitality sector, as well as on the health of small to medium enterprises (SMEs). The tourism industry is a significant contributor to Asia’s regional economy, and border closures triggered massive revenue loss for hotels, restaurants, and tour operators alike. Meanwhile, SMEs reliant on international trade struggled to manage their supply chain and produce goods and services at their standard quality. As a result, many of these businesses were forced to lay off staff or close permanently, causing unemployment and financial hardship not seen in the region in decades.

In Singapore, fears mounted as the city-state famous for jaw-dropping events and experiences was forced to find its footing in the virtual world [and successfully so, as one resort franchise launched the world’s first Metaverse hotel in May 2022]. Air and Seaports reopened in May 2022 to widespread enthusiasm; however, with much of the region slowly waking up, it felt like inbound regional travel and trade continued to suffer. 

In hindsight, the tourism sector performed better than expected in 2022, with an estimated 6.3 million visitor arrivals. While this is a mere one-third of 2019 arrival numbers, it exceeds the 4-6 million post-pandemic forecast from the Singapore Tourism Board (STB). The outlook for The Lion City is bright, with visitor numbers expected to return to pre-pandemic levels by the end of 2024.  

Singapore could have fared much worse by all measures but didn’t for three key reasons.

1. China’s Delayed Re-Opening

Until this month, China’s borders remained closed, and flights between the mainland and Singapore were at 10% of pre-covid capacity. However, three years of pent-up demand in China pushed citizens with wealth and access to shift their focus to Singapore, known among them as “Asia’s Switzerland”.  A Financial Times deep-dive published in early January 2023 reports a surge in Rolls-Royce and real estate purchases and the set up of family offices in Singapore as the overwhelming response to geopolitical tension and decoupling among the super-rich.

2. Inflation and Recession Fears in the US and Europe

Singapore closed 2020 with 400 family offices and saw that number surge to 700 by the end of 2022. While most have come from China, there has been a noticeable spike in the number of family offices coming from the U.S. and Europe due to recession concerns, rising energy costs, and growing inflation under challenging governance models. As a result, Singapore’s political stability, strategic trading location, tax incentives, and reputation as a thriving financial and wealth management hub make it a formidable choice compared to its contenders.

3. The Strength of the Singapore Tourism Board 

Singapore’s favorable outlook would not exist without the Singapore Tourism Board’s (STB) foresight and proactive marketing efforts. As a result, the country’s calendar of events has grown increasingly impressive since borders re-opened, with several inaugural leisure and sporting events, such as the Tour de France Prudential Singapore Criterium having taken place in 2022, and a host of inaugural food and beverage events slated for 2023. 

Meetings and Incentives saw a strong rebound in 2022, with the STB securing high-profile industry trade shows and conferences such as FIND: Design Fair Asia, the 14th World Stroke Congress, and SuperReturn Asia, Asia’s leading private capital conference, which relocated from its planned location in Hong Kong.

The hospitality industry’s figures also show promise, having launched 465 new rooms in 2022 from major hospitality brands, including Raffles, Marriott International’s Edition Hotels, and IHG’s Voco, with additional openings from The Standard and Mondrian due in 2023. 

While the recovery period is certainly not over for Singapore, the island nation’s performance throughout such a challenging time deserves applause, as it signals confidence in the country’s future outlook. Time will tell whether China and Hong Kong’s late re-emergence will further impact the forecast growth rate across Singapore’s industries and private sector. 

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