Singapore Economy Samples for Students †MyAssignmenthelp.com

Question: Discuss about the Singapore Economy. Answer: Introduction: The Singapore economy shows a highly developed trade-focused market economy. It is ranked the most open economy globally, seventh least corrupt economy, most pro-business economy, with low taxation rates of fourteen percent of the GDP and it has 3rd highest per-capita Gross Domestic Product with respect to Purchasing Power Parity. It is prominent foreign direct investment (FDI) outflow financier globally. It has further benefited from inward FDI flow from worldwide investors alongside institutions because of the economys attractive investment climate as well as a stable political atmosphere. The economy is known as the regional hub for wealth management due to its exports of electronics, services and chemicals that offer dominant source of revenue. Through this enormous revenue, Singapore is able to purchase raw goods alongside natural resources that the economy is lacking. The Singaporean economys outlook appears to have become less gloomy following the turn of the beginning of 2017, with the 1st-quarter growth beating the estimates while the government anticipating a higher GDP figure this year (Tan, Lean, Khan, 2014). The Singaporean economy stays on a moderate growth path. Nevertheless, the economy is somewhat constrained by the range of unsettled imbalances, amazing suppleness is resurfacing. The industrial production in Singapore has recorded another month of the healthy growth in 2017 April, backed by the prominent performance in the electronic cluster alongside PMI reading for quarter two thereby far signaling the expansionary circumstances. However, the recent data on the Singaporean economys exports indicate that external demand for the economys products that cushioned the slowdown of quarter one might be cooling that would subsequently weigh on the activities of manufacturing. On the local front, weak growth of wage as well as still high household indebtedness endure to limit private consumption, despite Aprils 2nd consecutive month of the healthy growth in sales in retail to certain improvement. The household expenditure has been agonizing from the strong correction in the price of the houses since reaching its climax in the year 2013. Such a correction does appear to be easing since there exist signs that transaction volumes remain growing. Production output performance analysis: The real GDP in current prices in Singapore is 291.860 billion US dollars having grown from 100.70% billion US dollars in 1997 to 296.970 billion US dollars in the year 2016 growing at the average rate annually of 6.320%. The real GDP of Singapore grew 2.50% year-on-year (YOY) in June 2017 after a growth of 2.50% in the past quarter. The real GDP growth YOY data updated quarterly from 1976 to June 2017 shows an average grow rate of 7.5%. The real GDP growth rate hit a record time high of 19% in June 2010 and an all-time low of -8.80% in March 2009. The real GDP per capita in current prices of Singapore is 51, 431 USD in 2017. The real GDP per capita expanded from 26, 387.390 billion US dollars in 1997 to 52, 960.730 billion US dollars in the year 2016 growing at the average annual rate of 4.160%. The Singaporean economy rebounded in quarter two but declines short of the expectation of the market. The economy returned to the growth in quarter two of the year 2017, chiefly on the back of the greater activities of the manufacturing. The aftermath followed a contraction in first quarter that stood largely impacted by the base effects due to the impressive expansion of the quarter four, and by the traditional volatility of the Singapores GDP figures. Based on the advanced estimates published by the Ministry of Trade and Industry on July 14th, the GDP of Singapore expanded by 0.4 percent in second quarter from the past quarter at the seasonally adjusted annualized rate (SAAR), comparing to first quarters revised 1.90 percent contraction (past reported: -1.30% qoq SAAR) however declining short of expectations of the market (Tremewan, 2016). The rebound came on the back of the manufacturing industry acceleration alongside the turnarounds in the services as well as construction industries. Manufacturing expanded 2.40% quarter-on-quarter (qoq) SAAR, up from the first quarter mild 0.40 percent increase. The service industry grew 0.40 percent qoq in 2nd quarter of the year, relative to past quarters 2.70 percent contraction. The construction sector further rebounded in qoq basis, growing 4.30 percent in second quarter, following sharp 14.40 percent contraction recorded in quarter one. The GDP expanded 2.50% in quarter two in year-on-year basis thereby matching the first quarters revised 2.50 percent growth (past reported: +2.70 year-on-year) alongside FocusEconomics Consensus Forecast. The growth arose following an eighty percent expansion in manufacturing industry (first quarter: +8.50% YOY), led by the electronics growth and precision engineering clusters. The manufacturing expansion as indicated in the previous quarter, remained underpinned by the stronger external demand for the semiconductors alongside being manifested in encouraging figures for the industrial production that expanded for 10th month in a row in May. On the YOY terms, the growth in service industry accelerated from first quarters 1.40% to 1.70% in the second quarter. Stronger demand externally accounted for the slight acceleration thereby benefiting the transportation and subsequent storage as well as business service sub-industries. The construction industry on the downside endured to contract in the annual basis in the second quarter and declined 5.60 percent that denotes a slight enhancement from the first quarters 6.10 percent contraction. The weaknesses in both public- and private sector construction activity weighed on adverse performance of construction sector that is still agonizing the consequences of the property prices correction that began following the climax hit in the year 2013 and is only slowly manifesting signs of softening. The economy endured to benefit from the latest improvement in worldwide trade and strong expansion in electronic production underway beginning quarter four of 2016, whereas more domestic-ori ented sectors stood affected by the slugging conditions at home (Tan, 2016). The economic growth of Singapore is probably to stay tepid ahead, gaining from ongoing recovery in external sector yet agonizing from weak demand domestically. The economys efficient infrastructure, greatly transparent regulatory atmosphere, low taxation burden alongside stable governance make Singaporean economy greatly dynamic as well as resilient. However, deteriorating labor market conditions, ongoing property market weaknesses alongside gradual productivity benefits remain weighing on household expenditure, whereas low prices of oil alongside increasing rates of interest in the United States pose descending risks to outlook. The Singaporean Monetary Authority anticipates GDO to grow at the rate ranging 1- and 3 percent this year. The Focus Economics Consensus Forecast is projecting that Singaporean economy shall expand two percent this year that is unaltered from the previous two months first. The growth rate is expected to accelerate slightly to 2.10 percent. The performance trends of the Singapore economy can be understood through climate change and resource scarcity, technological breakthroughs, shifts in global economic power and rapid urbanization. Singapore remains in the confluence of China cementing its dominance in trade in Asia and United States pivoting to Asia via its successful conclusion of TPP negotiations. These major shifts makes Singapore in a unique position to capitalize on opportunities. Rapid urbanization brings main implication for business and Singapore must see its associations not just with economies, but also with regions and cities. The Singaporean government has adopted economic development and growth strategy as a measure adopted to achieve the production output performance at the national level under the formulation of the Ministry of Trade and Industry (MTI). These agencies have triggered reforms and transformation. The government recent push for economic strengthening for more sustainable long run growth is anchored on strategies delineated in the year 2010 economic strategies committee report. Thus the government focus on growth through skills and innovation, and anchoring Singapore as a global Asia Hub. Labour market analysis The adjusted rate of unemployment in Singapore stood at 2.20% in the March quarter of the year 2017 relative to preamble estimates of 2.30% and identical to previous quarter. The jobless rate stood at its highest level beginning 4th quarter 2010, as additional people made entry into the labor force whereas total employment shrank the most beginning the 2nd quarter 2009. The unemployment rate in the economy averaged 2.450% from the year 1986 till 2017, hitting a record time high of six percent in 1st quarter of the year 1986 and an all-time low of 1.4% in 2nd quarter of the year 1990. In the 3 months to March, the unemployment rate remained unaltered from the past quarter for residents (3.20%) and citizens (3.50%). The total employment declined by 6,800.0 following a rise of 2,300.0 in the 4th quarter and hitting the highest quarterly contraction beginning June quarter 2009. The drop happened in manufacturing (-4,300) alongside construction (-12,500.0), chiefly because of a decline in Work Permit Holders whereas service industry witnessed a rise of 9,900 in service sector employment. Some 4,000.0 workers became retrenched, lower than 5,440.0 workers in December quarter and identical period the past year (4,710). The redundancies dropped in the manufacturing (890.0 from 1,990.0 in 3rd quarter ad hitting lowest figure beginning 2nd quarter of the year 2015 (870.0) and services (2,440.0) from 2,840.0. In comparison, construction recorded more redundancies (660.0 from 580.0). The services (61%) formed the bulk of all retrenchments, chiefly in the wholesale trade (13.0%), financial services (12%) and professional services (12%). The re-entry rate amongst the residents made redundant stood at 64.40%, contrasted with 64.70% in the past quarter. The job vacancies figure (seasonally adjusted) amongst the private sector establishment with at least twenty-five workers and public sector dropped slightly in March 2007. Nevertheless, vacancies amongst small private sector establishments employing less than twenty-five workers shot up. This brought total vacancies for Singapore economy increased (45,300.0 from 44,500 in quarter three). Consequently, the seasonally adjusted ratio of the vacancies of job to unemployed individuals improved slightly following 7 straight quarters of drop. The seasonally adjusted recruitment rate dropped to 2.10% in the 1st quarter 2017 following the uptick in previous 3 months. The recruitment rate has stayed on a general downtrend beginning 3rd quarter 2014. Meanwhile, the resignation rate held stable at 1.80% beginning the start of the year 2016. The unemployment is described as persons who do not have a job, have looked for work actively in the previous 4 weeks are unable to find work at prevailing wage rate and are presently available for work. The types of unemployment in Singapore include cyclical/demand-deficient, structural and frictional unemployment. Cyclical unemployment is a main trigger of unemployment in Singapore since the country has a huge external sector and remains hugely reliant on external demand for the growth of economy. For example, in Singapores manufacturing of electronics, the economy exports hugely to rest of the globe. In case the global demand for its electronics declines, firms producing electronics shall face a decreased demand. Since the country is small as well as open economy, heavily reliant on exports, where exports decline, Singaporean AD will drop, and shift to left thereby lowering national output and income, whereas increasing cyclical unemployment. Due to globalization, Singapore is inv olved in huge restructuring and in the course structural unemployment may ensue. Singapore has changed from the labor intensive to capital intensive economy, and hence different skills are needed. Workers without appropriate training and expertise to move into the different sector are retrenched hence contributing to structural unemployment. Frictional unemployment in Singapore occurs since it takes time for individuals to find novel jobs when they alter jobs or look for suitable jobs. The creation and destruction of jobs creates need for individuals to look for jobs as well as for firms for workers, and subsequently there is a period lag. The government of Singapore has taken various measures to achieve full employment. The government is using targeted employment programs to obtain full employment for all. Thus, the government has undertaken policies that direct jobs to areas of high unemployment. The government uses the public and non-profit employment programs thereby creating jobs by meeting unmet needs. The government is also using the public investment and infrastructure. The government has identified shortfall of the public investment in broadband; research and development; transportation and education. Thus the government is undertaking sustained program of public investment to create jobs as well as increase its productivity and growth through budget policy as a tool to allow the government raise productivity and bring the economy closer to full employment (Chellaraj Mattoo, 2015). Price level analysis The Singapores consumer prices increased 1.40% YOY in March of the year 2017 relative to the 0.40% increase in the previous month and in line with the consensus of the market. This was the highest inflation rate beginning June 2014, propelled by the surge in the housing cost alongside a swifter increase in the food prices. The core consumer prices that excludes the accommodation alongside the private road transport cost shot higher 1.60%, following the 1.70% gain in the previous month and matching the market expectations (Gagnon, 2014). On the basis of month-on-month, the consumer prices increased 0.30%, after declining 0.30% in April. The rate of inflation in the economy averaged 2.650% from 1962 till 2017, hitting record high of 34.0% in March of the year 1974 and an all-time low of -3.1% in September of the year 1976 as seen below: Inflation is the steady increase in the general level of prices for a basket of commodities over a given period of time and it is caused by a range of reasons including aggregate demand increases at higher rate than that of aggregate supply and import-price-push inflation. Where the aggregate demand increases faster than the aggregate supply as seen in the figure above, there is a tendency that Singaporean general price level will increase hence triggering inflation. Inflation in Singapore is also caused by the import-price-push inflation. It is the predominant cause of inflation in Singapore. Singapore as a small as well as open economy with few natural resources, the economy is heavily dependent on imports from other economies like Malaysia and China, with export as well as import spending more than thrice of Singapore GDP (Chow, Lim McNelis, 2014). This implies that where the rate of inflation in China or Malaysia is comparatively higher, Singapore import natural resources at comparatively higher prices that subsequently trigger a rise in price of a particular basket of commodities. Hence, there will be inflation due to import-price-push inflation (Low Thomas Vadaketh, 2016). Singaporean government combat inflation by adopting such measures as combined fiscal, monetary and supply-side policies to achieve stable price. Singapore mainly employ the exchange-rate policy to achieve stable price. Because the main cause is from imports, Singapore reasonably use its exchange rate when mitigating impacts of import-price-push inflation. The economy pursues a rate of exchange policy of slow as well as steady appreciation. Singapore increase its currencys rate of the currency appreciation via foreign reserve to buy its dollar when China and Malaysian have comparatively higher inflation. Thus imports become relatively less expensive based on Singapore dollar hence mitigating the effects. Singapore combat demand-pull inflation via supply-side policies that increase productive capacity of economy and hence aggregate supply. It increases workers quantities through schemes like Skillsfuture alongside such organization as Workforce Development Agency that equip Singaporeans with essential skills thereby increasing productivity (Abbas Rizvi et al., 2014). Conclusion The paper has covered key areas of Singaporean economy including production output performance analysis, labor market analysis as well as price level analysis. The unemployment in Singapore has been examined by highlighting the unemployment trend based on the unemployment rates as well as main types of unemployment in the economy. Further, and in the inflation in Singapore has been presented based on the inflation rate trend and the main causes of inflation alongside measures the government has taken to combat both inflation and unemployment. References Abbas Rizvi, S. K., Naqvi, B., Bordes, C., Mirza, N. (2014). Inflation volatility: an Asian perspective. Ekonomska istraÃ… ¾ivanja, 27(1), 280-303. Chellaraj, G., Mattoo, A. (2015). Can the knowledge capital model explain foreign investment in services? the case of Singapore. Chow, H. K., Lim, G. C., McNelis, P. D. (2014). Monetary regime choice in Singapore: Would a Taylor rule outperform exchange-rate management?. Journal of Asian Economics, 30, 63-81. Gagnon, J. E. (2014). Alternatives to Currency Manipulation: What Switzerland, Singapore, and Hong Kong Can Do. change, 2012, 13. 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