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Production Output Performance Analysis

The economy of Singapore is considered as the highly developed free economy market. The economy of Singapore is ranked as the open economy with most pro-business environment. The country has skilled workers and skilled force that contributes to the success of country education policy (McGilvray, 2016). Singapore provides a low rate of tax with 14.2% of the GDP with third highest per-capita GDP in respect of PPP. The trade to GDP ratio of Singapore averages around 400% and it is highest in the world.

Gross Domestic Product: 

GDP is defined as the economic value of all the finished goods and services that is manufactured in a nation throughout a particular period. It is simply measures a country’s overall economic activity (Scully, 2014).

GDP growth rate: 

The GDP growth rate ascertains the rate at which a country’s economy grow. It is done by comparing a nations GDP of one quarter to that of the previous quarter (Budiman, 2016). The GDP of Singapore grew by 8.80% in the third quarter of 2017 above the earlier quarter. The GDP growth rate of Singapore stood around 6.79% from 2006 to 2017. The growth rate reached the highest of 37.20 during the first quarter of 2010 and also logged a lowest growth rate of -13.50 in the fourth quarter of 2008 (Tradingeconomics.com 2017). The country largely depends on the foreign trade from the exports of the refined oil and exports of the electronic components. Ever since the independence the performance trend of the Singapore economy has been growing rapidly and consequently Singapore is presently ranked highest among the world in terms of the GDP.

 

Figure 1: Figure representing Singapore GDP growth rate

Source: (Tradingeconomics.com 2017)

GDP per capita analysis: 

GDP per capita is referred as the assessment of a nation’s economic productivity, which accounts for people. It is obtained by dividing a nations GDP from its total sum of population (Watanabe et al., 2015). The GDP per capita of Singapore that was last recorded stood around 52600.60 USD in 2016. It is noteworthy to denote that GDP per capita of Singapore is equivalent to 417% of the world’s average. From the year 2000 to the year 2016 the GDP per capita of Singapore average around 22953.93 USD by attaining a highest of 52600.60 USD in 2016 and recorded a lowest of 3389.60 USD in 1960 (Tradingeconomics.com 2017).

 

Figure 2: GDP per Capita of Singapore

Government Measure to Attain Economic Performance

Source: (Tradingeconomics.com 2017)

The ministry of trade and industry Singapore has implemented Standard, Productivity and Innovation Board (SPRING Singapore) with the mission of increasing productivity of the Singapore based small and medium enterprises through management development, access to technology and innovation (Taussig, 2013). Additionally, tax policies were also implemented to encourage small and medium scale enterprise to undertake new tools of deriving productivity. The economic strategies committee has focussed on productivity led growth by promoting innovation pervasive and strong commercialization of Research and Development.  The policies are for qualitative restructuring of the Singapore economy towards higher innovation and skilled labour.

Types of Unemployment: 

There are several types of unemployment which are as follows;

Cyclical unemployment: Cyclical unemployment prevails when a person loses their jobs because of the downturn in the aggregate demand. It is generally because of the contraction phase of the business cycle (Argy & Nevile, 2016).

Structural Unemployment: Structural unemployment takes place where there takes place a change in the economy, which forms a disparity amid the skilled workers and the skills that is needed by the companies. This kind of unemployment takes place due to the increase in the demand for job skills with other jobs skills becoming outdated and no longer in demand.

Seasonal unemployment: Seasonal unemployment is another type of unemployment that occurs in certain industry that produce or distribute certain products at a certain period of time (Blanchflower et al., 2014). Industries such as farming, tourism and construction are some examples where seasonal unemployment prevails.

Unemployment trend in Singapore: 

The seasonally adjusted unemployment rate of Singapore came down to 2.1% during the quarter ending month of September 2017 from 2.2% from the earlier three quarters (Frank et al., 2015). It is considered as the lowest unemployment rate since the third quarter of 2016. During the span of three months till September the unemployment rate of the residents in Singapore remained unchanged with 3.1% while for the citizens the unemployment rate declined from 3.3% to 3.3% in the second quarter. Around 3600 workers were laid off which marginally lower than the second quarter figures of 3640. Service sectors continued its trend of bulk retrenchment with figures standing 66% followed by the manufacturing sector of 19% and construction sector of 15%. The total amount employment declined by 2500 which was lower than 7900 fall in the earlier quarter (Piore, 2017). The fall was primarily attributed to the fall in the work permit holders in Marine and construction because of the lower prices of oil with continuous fall in the activities of construction.

Labour Market Analysis

 

Figure 3: Figure representing Singapore unemployment rate

Source: (Tradingeconomics.com 2017)

Government measure of achieving full employment: 

The ministry of manpower (MOM) has undertaken the progressive approach of increasing the quality of workforce and reducing the dependence on foreign labour to achieve quality economic growth driven by full employment. The ministry of man power has undertaken the approach of forming more partnerships with the trade associations to assist in finding work for over 1000 Professionals, Managers Executives and Technicians in the small and medium sized enterprises every year (Taussig, 2013). The government has undertaken the policy of increasing the labour force participations rate of both the women and residents by promoting service sector as the central driver of the employment growth. The ministry of manpower has continued to closely monitor the labour market conditions by announcing foreign workforce employment measures in order to attain the full employment.

Inflation trend: 

Consumer prices of Singapore increased by 0.4 from the previous year in the month of October for the year 2017 however it was below the market anticipations increase of 0.5%. The rate of inflation remained at the lowest from the month of April even though price of the food increased at the faster rate whereas the transportation inflation was similar from the earlier month. The inflation rate for food increased to 1.5% after the 1.2% rise in the earlier month.

The core consumer price which excludes the cost of accommodations and private road transport increased by 1.5% and was in accordance with the market anticipations (Tradingeconomics.com 2017). Based on the monthly basis the consumer price of Singapore declined by 0.3% after remaining flat in the earlier month. The rate of inflation in Singapore averaged around 2.63% from the year 2000 till 2017. The inflation rate of Singapore reached the highest of 34% in March 1974 and recorded a lowest of -3.10% in September of 1976.

 

Figure 4: Figure illustrating inflation rate of Singapore

Source: (Tradingeconomics.com 2017)

Inflation represents that there is a continuous upsurge in the level of price. This generally takes place due to either increase in the aggregate demand or because of the cost push factors.

Demand pull inflation:

If the economic condition of a country is near or close to the full employment, then an increase in the aggregate demand results in rise in the level of price. As the companies reaches full volume they respond by putting up the price result in inflation (Budiman, 2016). Additionally, with near full employment having labour shortage workers can obtain higher wages that ultimately increases the spending power. An economy suffers from demand-pull inflation if the economy attains development, which is beyond the long run tendency rate of development.

Price Trend Analysis

Increasing housing prices: Increasing price of the house does not directly result in inflation however they can result in positive effect on wealth and promotes consumer oriented economic growth (Blanchflower et al., 2014). This directly results in demand pull inflation.  

Cost push inflation:

Cost push inflation takes place because of several factors that are as follows;

Increasing wages: Rising wages is the chief reason of the cost-push inflation since wages forms the most important cost for several organizations. Higher wages add to the growing demand.

Profit push inflation:

When companies increase the price to obtain higher rate of inflation this results in cost push inflation. They generally take place during strong economic growth.

The monetary authority of Singapore (MAS) has undertaken the activity of appreciating the dollar of Singapore in order to mitigate the higher price of imports on food and oil. The retail price watch group has been prepared to monitor closely excessive price increase in Singapore of food and other regular necessary items.

Conclusion: 

The prudent macro-economic policy with stable political and legal environment can be considered as the key for growth of Singapore economy. The economy of Singapore has been successful in maintaining a strong and dynamic economy. The appropriately structured property rights have helped in promoting entrepreneurship in Singapore with increased productivity. Conclusively Singapore openness to the international trade and investment has contributed immensely to its growth.

Reference List: 

Argy, V. E., & Nevile, J. (Eds.). (2016). Inflation and Unemployment: Theory, Experience and Policy Making. Routledge.

Blanchflower, D. G., Bell, D. N., Montagnoli, A., & Moro, M. (2014). The Happiness Trade?Off between Unemployment and Inflation. Journal of Money, Credit and Banking, 46(S2), 117-141.

Budiman, A. M. D. (2016). The Competitiveness of Singapore in the ASEAN Economic Community.

Frank, R. H., Bernanke, B. S., & LUI, H. K. (2015). Principles of economics. McGraw-Hill Asia.

McGilvray, A. (2016). Singapore: The brain-gain game. Nature, 537(7618), S16-S17. 

Piore, M. (Ed.). (2017). Unemployment and inflation: institutionalist and structuralist views. Routledge.

Scully, G.W., (2014). Constitutional environments and economic growth. Princeton University Press.

Singapore GDP Annual Growth Rate | 1976-2017 | Data | Chart | Calendar. (2017). Tradingeconomics.com. Retrieved 27 November 2017, from https://tradingeconomics.com/singapore/gdp-growth-annual

Singapore GDP per capita | 1960-2017 | Data | Chart | Calendar | Forecast. (2017). Tradingeconomics.com. Retrieved 27 November 2017, from https://tradingeconomics.com/singapore/gdp-per-capita

Singapore Inflation Rate | 1962-2017 | Data | Chart | Calendar | Forecast. (2017). Tradingeconomics.com. Retrieved 27 November 2017, from https://tradingeconomics.com/singapore/inflation-cpi

Singapore Unemployment Rate | 1986-2017 | Data | Chart | Calendar. (2017). Tradingeconomics.com. Retrieved 27 November 2017, from https://tradingeconomics.com/singapore/unemployment-rate

Statistics, S. (2015). Latest data on GDP per capita.

Taussig, F. W. (2013). Principles of economics (Vol. 2). Cosimo, Inc..

Watanabe, C., Naveed, K., & Neittaanmäki, P. (2015). Dependency on un-captured GDP as a source of resilience beyond economic value in countries with advanced ICT infrastructure: Similarities and disparities between Finland and Singapore. Technology in Society, 42, 104-122.

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