For the ninth time in 11 years, Singapore has been ranked top as the world’s most expensive city, at least according to the Worldwide Cost of Living 2023 report published by the Economist Intelligence Unit (EIU).
This year, Singapore shares the top spot with Geneva (Switzerland), placing ahead of New York (US) and Geneva (Switzerland), both ranked joint-third. Hong Kong came in fifth to round up the top 5.
For many of us living in Singapore, it won’t be a surprise to learn that we are again taking the pole position in an area that we would rather do without. Over the past few years, both housing and rental prices have increased significantly. We were already the most expensive country in the world to buy a car, yet COE prices continue to rise in 2023.
To make matters worse (or better, if you are a Singaporean), strengthening the Singapore Dollar (SGD) against many other foreign currencies means that, relative to the rest of the world, Singapore has become even more expensive to live in.
Is Singapore An Expensive & Prosperous City To Live in?
As a country, there are prices to be paid for becoming rich, and one of the first things that usually happens is that things become more expensive. Whether they are essential that all of us need or luxuries that we can do without, the cost of living generally increases when a country becomes more prosperous.
For example, home prices increase when people become richer in a country. The cost of providing and consuming services – getting a haircut, visiting the doctor, taking public transport or eating out – will also increase as wages go up. These changes are to be expected.
The main concern that the government and its people would have is whether the economy and wages are going up faster than the cost of living. This is particularly important for a city-state like Singapore, as our people do not have cheaper cities to retire to once they stop working.
GDP Per Capita In Singapore Vs Other Expensive Cities In The World
Gross domestic product (GDP) per capita is an economic metric that breaks down a country’s economic output per person. According to The World Bank, as of 2022, Singapore has a GDP per capita of US$82,807. In comparison, in 2022, the GDP per capita for Hong Kong is US$48,983.
Other cities, such as Zurich, Geneva and New York, are tricker as they are states rather than countries. While Switzerland has a GDP per capita of US$92,101 and the U.S. has a GDP per capita of US$76,398, these figures are for the entire country and are not representative of individual cities or states.
Source: World Bank
Online sources put the GDP per capita for Geneva and Zurich at around US$118,239 and US$110,748, respectively (as of 2020 and assuming 1 Swiss Franc to 1.15 USD), while New York’s GDP per capita is at US$104,343 as of 2022.
In other words, if you compare Singapore as a city to New York, Zurich and Geneva, our GDP per capita is lower. This may not come as a surprise, given that both New York and Zurich are seen as the financial capitals of the world, while Geneva is home to the headquarters of many major organisations like the United Nations and Red Cross.
It’s worth pointing out that, as a city-state, Singapore would likely be unable to compete on a GDP per capita level against the richest and most prosperous cities in Europe and the U.S.
After all, as a city-state, our economy will need to cater to different industries such as construction and F&B. While these are sectors vital for the development of any country, they don’t necessarily contribute a large amount to GDP compared to sectors like banking and insurance. In Singapore’s case, these sectors also require quite a large number of workers.
The average person in Singapore would also likely enjoy more subsidies or wealth transfer than those living in some of Europe or the U.S.’s most prosperous cities. For example, grants and subsidies are available for Singaporeans buying their first HDB flat. While this doesn’t mean that flats automatically become cheap, it does, to some extent, play a role in lowering the cost of living for citizens.
Another example would be in education. Thanks to generous subsidies, most Singaporean households would pay very little for education at the primary and secondary levels. This is compared to a foreigner whose children may not enjoy any subsidies at public schools or would enrol in an international school. These subsidies would significantly lower the cost of living for a Singapore family as compared to foreigners who are working and living in Singapore and do not enjoy any subsidies.
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