Economic of Singapore

[pic 1][pic 2]

Introduction

 This assignment is the economic performance analysis of the country “Singapore” during the year 2005-2014. Geographically, Singapore is an island country in Southeast Asia and located at the tip of the Malay Peninsula that has a population of 5.61 million. However, either it is a small country or there are no natural resources but it is an economic giant because it was highly focus on human capital and because of its strategic geographical location which had performed greatly by way of a bustling port, standing as a logistic leader and center of trading in region. Singapore’s business nature was an open type of business that is free from corruption and that causes the economic condition of the country a high result, with less variable prices and low tax rate that was different from other developed countries.

With the history dating back to 1963, Singapore obtained independence from the United Kingdom and it had a very narrow local market with increasing levels of unemployment and high poverty rate . The standard of living was inferior and unemployment averaged 14 %. The Gross Domestic Product per capita was US$516, and half of the population was not educated. To settle this issue, the Singapore government formed the Economic Development Board to encourage investment both local and foreign market as promoting the production of  skilful  employees, bringing  foreign talents, opening the path for import and export market, introducing Goods and Services Taxes(GST), expanding Government revenue and controlling exchange rate and prices stability. As a result, Singapore’s economy had been quickly developed and then Singapore GDP per capita rose to US$ 40,020 in 2005 and became US$ 56,319 in 2014. Furthermore, living standard gradually increased with more workers transferring from low-income class to middle-income class. Therefore, unemployment rate was 4 percent in 2005 and it declined to 1.7 percent in 2014.

Production/Output Performance Analysis

GDP is one of the measurement used to evaluate the health of a country’s economy or development of a country’s economy. It means the total dollar value of all final goods and services produced in one country in a period time or a year.  The Real GDP per capital is obtained by dividing the real Gross Domestic Product by the populations of the country and it is used to measure the average output between countries. GDP preforms as a measure of standard of living trends to improve when GDP per capita increases. This causes GDP a proxy for standard of living, rather than a direct measure of it. There are two major things that GDP of a country can increase ; (1) the prices of goods and services ,(2) the quantity of goods and services. The following  figures show the information about the production performance of Singapore.

              [pic 3]

Figure1: Singapore’s Real GDP (US$ Billion)

From 2005 to 2009, Singapore GDP  gradually rose about 1.70717 to 2.06401 US$ billions. There is a slightly decrease in GDP while the 2009 global financial crisis. After that GDP increased again to 2.81367 US$ billions in 2014. Hence, Singapore’s economy had gained from a high inflow of Foreign Direct Investment (FDI) because of its great investment environment. In addition, the economy was largely influenced by exports, particularly in electronics and chemicals and service sectors such as banking, financial services, retail and transportation . Singapore’s economic also depended on Entrepôt trade. So, it imported raw materials and process them for re-export. Oil refining and water fabrication were the most important economic industries in Singapore.

       [pic 4]

Figure 2 : GDP Per Capital

Figure 2 is shown for Singapore GDP per capita. Accordingly by this figure, GDP per capita was US$ 40020.260 in 2005 and it rose to US$ 44191.23809 in 2008. Due to global financial crisis, it slightly decreased to US$ 41133.2998. Thereafter, it increased until US$ 51440.8168 in 2014.This considerable great economic performance was mainly obtained by a boost in labour supply. As a result of Singapore resources, Singapore was to give fair labour to reach  the demand of economic in country. Therefore, the previous 5 years from 2009 to 2014, Singapore GDP per capita was quickly progress by year.

              [pic 5]

                                Figure 3 : Singapore’s GDP Growth Rate

GDP Annual Growth Rate in Singapore was generally about 5.96 % from 2005 to 2014, reaching the high of 15.24 % in the 2010 and the low of (-0.603) % in the year 2009. Reducing in GDP growth rates for 2008 (+1.787 percent ) and 2009 (-0.603 percent) was the effect of the global financial crisis. In the year 2010, GDP increased  a spectacular 15.24% due to 28.2% growth in manufacturing sector. In  2011, the GDP growth rate was a good 6.207% but it grew down to only 3.6701% in the year 2012. For the year 2013 and 2014, GDP re-bounded and increased at 4.675% and 3.260% respectively. 

Due to Singapore limited resources, Singapore was faced a key challenge to give adequate labour supply to meet the economic demand in the country. At the same time as an ageing population and reducing citizen birth rate, Singapore government responded with policies to attract foreign worker to overcome the limitation of local human capital resources. Moreover, Singapore’s GDP were developed by many sources. Therefore, Singapore government updated the education, increased in integration with other country especially in trade, opened the several sectors for foreign investors and promoted the higher value-added activities in the sector of manufacturing and service to control the competitive position of economy. Singapore government had also carried out the several cost-reduction measures, such as tax cuts and rent deductions to reduce the cost of business administration in Singapore.

Labour Market Analysis

Unemployment is mean as the condition in which people who are able work but do not have a paid job. Frictional, Structural and Cyclical are the three main types of unemployment. Frictional unemployment happens when the employees transfer from one job to another job. Incomplete information about the current opportunities of job can longer the time to get the job. Structural unemployment is raised when there will be developed in technology and high foreign competition so that the workers are unable to meet their job requirements or responsibilities. All the facts cause the barrier to employ and create the employment. Structural unemployment is more longer than frictional unemployment. Cyclical unemployment is especially caused by business cycles, when the production goes down, a lot of firm decrease their demand for inputs, including labor in recession periods.