Economic Performance Analysis Singapore †Myassignmenthelp.Com

Question: Discuss About The Economic Performance Analysis Singapore? Answer: Introduction In the world economy, Singapore is considered as one of the fastest growing countries. This is one country the successfully devices free market policy. Government intervene only in areas where free armlet fails to work efficiently. The combi8nation of free market and government intervention together maintains a stable economic environment within the nation. Because of its small size, the country highly depends on the external sectors. Export has a notable contribution in national income. Present paper conducts a brief analysis of last ten years performance trend of Singaporean economy. Performance of some major economic indicators is evaluated. These include output performance, performance of labour market and finally stability in price level. Output performance analysis Real GDP, real GDP growth rate and per capita real GDP Other than gross domestic product (GDP) there is no better indicators that can trace overall output performance under a single measure. GDP is a composite measure that represents values of goods and services produced in an economy in the accounting year. GDP expresses these values in monetary terms. In order to know monetary values either the market prices of the ongoing year or market values of a fixed year is considered. GDP computed using fixed years market value is termed as real GDP (Mankiw, 2014).. Fixation of market price helps to offset the inflationary impact and thus presents the true picture of output in the economy. Percentage change in GDP is known as growth in output, which actually represent economic growth rate. Growth in real GDP is mostly used to capture real economic growth. Other than income and output, an important indicator of living standard of people in the economy is their average income. Average income is expressed as per capita GDP. Per capita GDP is comput ed by total national income by total population (Parente Prescott, 2015). Real GDP, growth in real GDP and per capita real GDP all are thus important for tracing output performance. Performance trend in Singapore Figure 1: GDP in Singapore (Source: tradingeconomics.com) Figure 2: Real GDP growth rate in Singapore (Source: data.worldbank.org) Figure 3: Per capita real GDP in Singapore (Source: data.worldbank.org) Real GDP in Singapore shows a progressive trend in the last ten years. The economy accounts a increase in GDP from 179.98 USD billion to 296.97 USD billion in 2016. Highest GDP in the last ten years is accounted in 2014, the GDP being 308.14 UDD billion. The boost in GDP is resulted from the nation initiatives to quickly recover from financial crisis took place in 2008. Singapore accounts nearly 0.48% of world GDP (Siddiqui, 2016). In terms of real GDP growth rate, Singapore stands as an instance to world economy, Growth rate though tumbled at times global recession in 2008 it quickly regained is growth trend. External sector in Singapore helps the economy a lot in becoming worlds fastest growing economy. Export of refined oil and electronic equipment are two important pillars of outstanding economic growth. This open economy with a business friendly environment attracts both foreign direct and portfolio investments. With rising GDP and more or less stable population, the per capita GDP in Singapore is either stable or growing overtime. The last recorded per capita income in Singapore in 2016 is 52600.60 US dollars (Tan Ho, 2015). Average income in Singapore is nearly 417 percent of the average recorded for the world. Government measure to boost output performance Government has two direct tool of affecting output either directly or indirectly. The direct policies of government to expand output of the nation are fiscal policy and monetary policy. Expansionary fiscal policy and ease monetary policy are appropriate policy choice of government while boosting overall output in the economy. Expansionary fiscal policy Increasing government expenditure is one way to increase nation GDP. Singaporean government increases its expenditure different fields. Infrastructure of an economy is important for attracting business investment and make progress in industrial development. In order to increase infrastructural expenditure government recently launches Resilience package (Tang, Liu Cheung, 2013). In Singapore, production driven growth is used as a tool of economic growth. To increase productivity investment has been made in education and training program. Expansionary Monetary Policy This includes increasing the supply of money in the economy. Money supply in Singapore has been increased with open market operation (Gallo, Hann Li, 2016). Increased money supply means increase in investible fund. When investment rises, then production in the economy rises and so is the output. Labour market analysis Unemployment trend based on unemployment rates The employment rate of Singapore based on seasonally adjusted stood 2.1 percent for the quarter ending June 2016. The rate of unemployment remained at the highest level ever since the end of December. In three months to June, the unemployment rate of Singapore fell down for inhabitants to 3.1 percent and for non-residents it fell down to 3.3 percent. In the first quarter of the year 2016 approximately three thousand five hundred workers were laid off (Pigou, 2013). The fall during the quarter is considered as broad based throughout the industries. The sum of employment declined to 7500, which is subordinate to the declining rate of 9400 in the previous quarter. The unemployment rate in Singapore averaged 2.45 percent from 2000 to 2106. Ever since the quarter of December 2010, the rate of unemployment in Singapore remained highest. Figure4: Unemployment trend in Singapore Source: (tradingeconomics.com) Unemployment and types of unemployment in an economy It is not possible to maintain a full employment condition in the economy. Some members in the labour market are unable to find jobs at the prevailing wage. This is captured by the rate of unemployment in the economy. There are a number of reasons leading to incidence of unemployment in the economy. Unemployment experienced because of some structural change is termed as structural unemployment. Unemployment due to seasonal factor is known as seasonal unemployment. Sometimes labourers in the economy are unemployed because of lack of technical skills resulting in technical unemployment. Another type of unemployment dominating in the economy is frictional unemployment (Keynes, 2016). Types of unemployment in the economy of Singapore: There are three most common types of unemployment in Singapore which are as follows cyclical, structural and frictional unemployment. Cyclical Unemployment: Cyclical unemployment in Singapore is majorly responsible for unemployment because Singapore is depended on the external sector for economic expansion (Georgellis, 2015). The overseas demand for Singapore electronic goods have fallen and companies manufacturing such goods faces lower demand. This forces firms to lower their cost of production by reducing the output and employment. Structural Unemployment: Globalization resulted in huge restructuring of Singapore which led to structural unemployment. It has changed to capital intensive from labour intensive economy and workers are required different skills (Taussig, 2013). Workforce with insufficient training to shift in different industry is laid off which results in structural unemployment. Frictional Unemployment: Frictional unemployment in Singapore happens because of the time consumed by citizens to locate new employment when they look for change or search another job (Georgellis, 2015). The formation and demolition of job results in time lag for those in search of employment or companies searching employees and this additionally results in frictional unemployment. Measures to achieve full employment To reinforce the domestic workers under the age of 40 looking for employment in the areas for professional, executives and technicians for being laid off for more than six months will be considered under the government scheme of career support programme (Frank et al., 2015). In an effort to achieve full employment the Singapore government has adopted policies to lower the frictional unemployment by introducing the schemes of Community Development Council (CDC). Furthermore, the workforce development agency offers employment search service and labour market information to assist the strong networking of companies. Price Level Analysis Description of inflation trend The CPI in Singapore rose by 0.5 percent in respect of the increase of 1.4 percent in the earlier month with below market census of 0.7 percent increase. The price for food and transport increased in the previous month and the cost housing declined. The prices for domestic durables rose at slower rate by 0.7 percent because of 1.4 percent in the supply of household service and supply (Sloman et al., 2013). The cost for health and care rose in the earlier month to 2.5 percent and was especially driven by 3.4 rise in medical service. Meanwhile, the price for miscellaneous goods and services rebounded to 0.2 percent from 0.1 percent which was particularly driven by 0.7 increase in the consumption of tobacco and alcohol. There was a 4.0 percent rise in the personal effects and 1.7 percent increase in miscellaneous expenses. Prices of food rose by 1.4 percent after an increase of 1.5 in the earlier month (Bernanke et al., 2015). The core consumer prices after excluding the cost of accommo dation and road transport increased by 1.5 percent following a rise of 1.6 in the month of May. Figure5: Inflation rate of Singapore Source: (tradingeconomics.com) Definition of inflation and typical causes of inflation Inflation is known as the percentage in values regarding the Wholesale Price Index on yearly basis. It measures the change in price of goods and service in a year (Argy Nevile, 2016). Causes of inflation Inflation is caused due to the demand and supply side of the economy. Demand-Pull Inflation: Demand pull inflation takes place due to the rising aggregate demand at an unsustainable rate leading to increase in the force scarce resources with positive gap of output (Ormerod et al., 2013). This inflation takes place when there is a rise in cost of capital due to rise in exchange rate and reduces the foreign price of domestic export . Cost-push inflation: Cost push inflation takes place because companies respond to the increasing cost by raising the cost to protect their profit margin. Cost push inflation takes place because of the increase in the cost of raw materials and other components. Furthermore, another reason for cost push inflation is the increasing cost of labour due to the increase in the wages. Causes of inflation in Singapore In Singapore, cost push inflation forms the most important causes of inflation. As the economy of Singapore is a small and open with little natural resources, it is largely reliant on the imports from other nations such as Malaysia or China and the export expenditure is three times more than the Singapores GDP (Ormerod et al., 2013). The inflation of Singapore is comprises of import inputs that pose the threat in depreciation of the Singapore dollar. This means that when the rate of inflation is higher in other nations, Singapore will bear greater cost of import that ultimately results in cost-push inflation. Government measures to attain stable price To achieve stable price and threat of inflation, Singapore government makes the use of polices to control the rate of exchange. The government uses such policy to keep the inflation cost at lower rate. The Singapore government uses foreign currency reserves to purchase domestic currency. These policies help in keeping the import price less expensive and lowering the effect of higher imports inflation. To reduce the demand-pull inflation Singapore government adopts polices of improving the workforce through quality development program. Conclusion The analysis made above shows a picture of economic progress in Singapore. All the Output indicators such as real GDP, Per capita real GDP, and growth in real GDP all are improving overtime in the economy. In addition, the economy successfully achieves its target of full employment and price level stability. Unemployment remains lower overtime with maintaining a moderate or low inflation rate. Instead of using the tool of direct money supply, the policy of exchange rate control is more appropriate in Singapore. Government designs suitable policies keeping in mind particular characteristic of the economy and attain highest level of success as indicated by different performance indicators. References Argy, V. E., Nevile, J. (Eds.). (2016).Inflation and Unemployment: Theory, Experience and Policy Making. Routledge. Bernanke, B., Antonovics, K. and Frank, R., 2015.Principles of macroeconomics. McGraw-Hill Higher Education. Data.worldbank.org. Retrieved 2 August 2017, from https://data.worldbank.org/country/singapore. Frank, R. H., Bernanke, B. S., LUI, H. K. 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