The Performance of Singapore economic

Question: Discuss about the The Performance of Singapore Economic. Answer: Introduction I had chosen my country, Singapore, to analyse on her economy performance in Year 2016 for this assignment. Singapore is a free market economy with high infrastructural developments in the economy. The country is famous for its open and corruption free environment. Prices in the country are considered stable from year to year, and the per capita GDP of the country is the highest amongst other developed countries in the world. The exports of the country have changed considerably. Earlier the country had exported labour intensive products, whereas, now the products are of high value added. Singapore is raising its share in the business sector and the financial sectors of the economy (Wikipedia, 2016). An economist normally uses 3 key measures; real GDP growth, inflation rate and unemployment rate to analyse the overall performance for the country's economy. These methods are widely recognised and used across the world, for comparison purpose as well. Production output performance analysis Gross domestic product of an economy is used to analyse the purchasing power of the country along with its growth rate. The value of GDP is analysed by comparing the growth of the economy with the previous year. Whereas, real GDP measure individual purchasing powerper capita, i.e., real gdp divided by the size of the population. The real GDP rate is analysed based on the inflation of the country. It reflects the price of all goods and services produced by the economy in a specified period. Real gross domestic product measures the change in prices and predicts an accurate measure for the economic growth. There are 2 ways to derive GDP, either by using the income method or expenditure method. The income method analyse the gross domestic product of the economy would be analysed by calculating the income earned from various workers, profits of the companies and taxes minus the subsidies. On the other hand, expenditure method is analysed by calculating the total consumption, investments, net exports and government spending. Per capita GDP is used to measure the total output produced by the economy. It is calculated by taking the GDP and dividing it by the total population of the economy. While comparing the economic growth between two countries, GDP rate is an important measurement tool. It shows the performance of the countries. A rise in per capita GDP indicates growth in the economy and tends to reflect an increase in productivity.(Economics, The Sinagpore GDP per capita , 2016) Economic growth in Singapore In year 2016, the economy of Singapore shrunk into a seasonal adjustment with an annual rate of 2 percent on a quarter of 3 months from September 2016. The GDP is the weakest rate of growth since 2009 global financial crisis. Poor external demand and weak global trade are the key factors that drags on the low GDP this year. The Gross Domestic Product per capita in Singapore was last recorded at 51855.08 US dollars in 2015. The GDP per Capita in Singapore is equivalent to 411 percent of the world's average. GDP per capita in Singapore averaged 22402.29 USD from 1960 until 2015, reaching an all time high of 51855.08 USD in 2015 and a record low of 3389.56 USD in 1960.(Economics, Singapore GDP Growth Rate , 2016) It is obvious that Singapore is facing a poor GDP and it is unlikely to improve soon. Despite that, Singapore government had still decided to maintain the rate of appreciation of the currency of Singapore based on an effective exchange rate policy at zero percent, which is beneficial to the country as a whole. This is remark as a right decision move by the government given the economic condition Singapore is in right now. Labour Market Analysis Unemployment rate is the workforce percentage of the country who is not employed despite actively looking for a job. When the unemployment rate increases, it signals a weakening economy, while a decreasing economy resulted in inflation. Three forms of unemployment exist in an economy, which could be stated as frictional, structural and cyclical. Frictional unemployment arise from normal labour turnover time when seeking between jobs. Timing difference is the main reason for the frictional unemployment as it takes time for jobseekers to change and adapt in a new job environment. On the other hand, Structural unemployment arises due to a persistent mismatch between labour supply and demand. Cyclical unemployment is related to the unemployment, which is related to the cyclical trends in growth and production under the business cycle of the economy. Unemployment rate in Singapore Singapore is under the cyclical unemployment. The major reason for unemployment in Singapore is due to demand-deficient. The economy is bounded by a large external sector, which is dependent upon the external demand for the growth of the economy. The country has a small open economy, which is dependent upon the exports of the economy. A fall in the exports of the economy adversely affects its growth rate thereby lowering national output and income.(Sinagpore, 2012) The jobless rate of Singapore based on seasonal unemployment is 2.1 percent as recorded on the third quarter of 2016. The jobless rate remained at 2.9 percent and 3.0 percent for citizens. Moreover, it was reported that some 4,100 workers had lost their jobs in the third quarter 2016, making the total unemployment to be contracted by 3,300 from September to November 2016. It was the resulted as the weakest quarterly since march 2015. As Singapore's economy restructures for the future, it is foreseeable to have some consolidation and exit of less-productive businesses. The economy of Singapore is shifting towards the production of high value added sectors, such as medical, technology and data analytics, in the intention to maintain Singapore's competitiveness against the rest of the world. This further caused the unemployment rate to increase as some structural unemployment are created due to local lacking the skill to get hold of the job vacancies available in the market. Singapore Ministry of Manpower (MOM) and the Workforce Development Agency (WDA) had thus, actively promote a various scheme to help jobseeker. Website like www.jobsbank.gov.sg is created to cater for Singaporean first, MOM rulings states that all companies are required to list all job openings for job paying less than $12K a month in the jobs bank before they are eligible to hire foreign talent. This shows that the government is protecting her people at some extent. Due to the increasing layoff in the first few quarter of 2016, MOM had just announced a new rulings recently that from 01 January 2017, all employers are to notify any retrenchment exercise to allow Workforce Singapore (WSG) to offer employment facilitation assistance, to help affected employees find alternative employment or identify relevant training to enhance employability. SkillFuture is also introduced to encourage Singaporean to constant leaning and upgrading with a credit account of $500.00 from the government to her people. All these scheme and programmeare here to help Singaporean to positioned themselves to take on the new jobs and the challenging years ahead. Price Level Analysis Price level is examined through the Consumer Price Index known as CPI. CPI is used to measure the weighted index of average price of the goods and services that constitute the consumption basket such as food, housing, healthcare and transportation purchased by households in the nation. CPI is often used to assess the living cost and inflation condition of the country. Thus, it is important for prices to stay stable from year to year to prevent undesired inflation or deflation. Inflation is termed as the rise in the prices of the goods and services in the economy with respect to the basket that the government gathered to analyse the financial health of the nation. This means that increase in price for a type of goods does not necessary caused an inflation. When inflation happened, the consumers purchasing power reduces. This means that a dollar could only buy a smaller portion of a goods or service now compared to the past. The three main causes leading to inflation are demand-pull inflation, cost-pull inflation, and expansion of money. According to demand pull inflationthe commoncause of inflation of all three. This occurwhen demandfor a goods or service is higher than its supply. The supply is not able to produce in time for the growing demand. As such, sellers start to increase the selling price, causing inflation. The causes for demand pull inflation are normally due to growing economy and technology advanced. One good example would be Apple Iphone. Another cause is cost-push inflation. Cost-push inflation is the opposite of demand-pull inflation. Cost-push inflation occurs when there is an increase in the cost of production such as raw material, wages for workers, resulting a decrease inthe total production output and supply in the market. Hence, causing the supply to be weakens despite demand remains consistent. Thus, the prices of goods will increase (inflation).Other activities that may lead to higher production costs include worker strike or change in government policy that affects the countrys ability to maintain its desired supply output. The last cause is over-expansion of themoney supply. Money supply applied to all monetary tenders such as cash, loan, mortgage, etc. When interest is low and debts are cheap, there will be too much money chasing too little goods, creating inflation. The prices of everything will increase, even though neither demand nor supply has changed. When the money supply expands, thevalue of the dollar will reduces. And whendollar declinesrelative to the value of foreign currencies, the prices of imports will increase, creating cost-push inflation. Inflation in Singapore Singapore has been experiencing negative inflation in the recent years, as quoted in the MAS website. Despite the falling inflation rate, it does not constitute that Singapore is currently facing a deflation. This is because the CPI basket excludes accommodation and private road transport cost has been slowly increasing, even when the CPI shows otherwise. Food prices, on the other hand, has also crawling back slowly. The main reasons for the negative inflation are the low oil prices which affect globally worldwide. The slowdown in growth momentum in the nation and the impact of excess supply of housing also played a significant role to weigh down the headline number. Other than that,Singapore is expecting a technical recession soon and this has resulted in people being more careful with their spendingand tightening their wallets to tide through the period. Despite all the negative issue, some positive causes may resulted in a low inflation as well. In Year 2010, Singapore government introduced productive innovation (PIC) scheme, whichencourages businesses to get significant tax deductions or payouts for investments in research and development, innovation, automation. This scheme had thus help many businesses to make use of the opportunity to invest and use better technologies and machines, which in turn, reduced their production costs yet increase the quality of the output . By this way, it help to keep the constant competition in the market, which indirectly will drive down the prices of some goods and services, keeping inflation rate in Singapore under control. In addition, Singapore government had announced the easing in car loan regulation recently and it was reported that after the announcement, there are an increase in car purchases, which isexpected to lift the private transport CPI index, which accounts 11.5% of the overall CPI basket. Conclusion All in all, Singapore faced many challenges in Year 2016, due to global oil prices and recession. However, it is strongly believed that Singapore's economic outlook is rather optimistic in the coming years to come as Singapore government had put in lots of efforts in monitoring the various economic growth in the country and implementing various policies, rulings and schemes to keep the whole country growth at a controlled situation and ease some of the 'pressure' that Singaporean is facing. So, I believe Singapore is able to slowly climb back to a healthy economic in a year or two. References Economics, T. (2016). Sinagpore GDP. Retrieved from Trading Economics: https://www.tradingeconomics.com/singapore/gdp Economics, T. (2016). Singapore GDP Growth Rate . Retrieved from Trading Economics : https://www.tradingeconomics.com/singapore/gdp-growth Economics, T. (2016). The Sinagpore GDP per capita . Retrieved from Trading Economics : https://www.tradingeconomics.com/singapore/gdp-per-capita Explain the main types of unemployment in Singapore. (2012). Retrieved from https://jc-economics-essays.blogspot.sg/2012/08/a-explain-main-types-of-unemployment-in.html Sinagpore, M. t. (2012). JC Economics essay . Retrieved from https://jc-economics-essays.blogspot.sg/2012/08/a-explain-main-types-of-unemployment-in.html Singapore, G. o. (2015, July 16). Statement on Labour Market Developments. Retrieved from https://www.mom.gov.sg/newsroom/mom-statements/2014/15-sep-2014---statement-on-labour-market-developments Singapore, M. A. (2016). The Singapore Economy. Retrieved from SGS: https://www.sgs.gov.sg/The-SGS-Market/The-Singapore-Economy.aspx Tradingeconomics. (2016). Singapore Inflation Rate . Retrieved from Tradingeconomics : https://www.tradingeconomics.com/singapore/inflation-cpi Wikipedia. (2016, December 04). Wikipedia . Retrieved from Wikipedia : https://en.wikipedia.org/wiki/Economy_of_Singapore