Impact of the Asian Crisis on Singapore's Export Competitiveness

Despite its robust economic fundamentals relative to other members of the Association of Southeast Asian Nations (ASEAN), Singapore did not escape from the Asian Crisis that spread through Asia-Pacific and engulfed the global economy. First, this study uses two approaches to calculate real exchange rates and its misalignment to examine the Singapore dollar misalignment and its export competitiveness. Second, the relationship between Singapore's real exchange rate and its export growth is investigated using an error-correction model. The results do not support a substantial Singapore dollar overvaluation on the eve of the crisis. Based on purchasing power parity measures of misalignment, we detected only a modest overvaluation prior to the crisis. However, the real depreciation of the Singapore dollar as a result of the crisis, led to an external competitiveness gain and higher export growth.