Economic Data Analysis For Quick Economic Growth

Production output performance analysis

Describe about the Economic Data Analysis for Quick Economic Growth.

Ever since independence in 1965, the economy of Singapore has felt quick economic growth. Over the years, structure of export in Singapore has developed from “labour concentrated to high value added products” for instance, chemicals, electronics and biomedical. The vitality of services in the Singapore economy has also expanded with the rising shares of the monetary and commercial sector of the economy.

As a picture from the stage of 2000 to 2010, the GDP increased at double rate, which increased from S$163 billion to S$304 billion. The real GDP per capita also increased quickly at the compounded rate of approximately 12% per annum whereas the “inflation and unemployment” rate aggregated lower than 2% per annum and 3% per annum respectively during the period (Choy, 2012).

Singapore political and macrocosmic stability superior telecommunications, strategic geographical locations, skilled and educated workforce and infrastructure have significantly added in the quick development into the dynamic industry and financial centre in Asia. Trade still occupies a large share of the Singapore economy with exports amounting to more than US$120 billion and imports are anticipated to be around US$117 billion. The manufacturing sector especially the electronics still yields a huge number of earnings; the GDP portion of commercial and fiscal services has notably increased from 20% to 27%.

Real GDP, Real GDP growth rate and Real GDP per capita analysis:

The economy of Singapore has advanced by 1.1 per cent on annual basis in the third quarter of 2016, which is lower than 2% growth in the preceding period however, it was beyond the introductory approximations of a 0.6% growth. The figures improved by 1% with the growth of the manufacturing segment and the services were even whereas the construction amplified less than projected. GDP annual growth rate in Singapore aggregated around 6.72% until 2015 by reaching an unsurpassed high of 18.90% during the second quarter of 2010 and recorded low of -8.80% during the first quarter of 2009. Singapore has experienced a stable growth in GDP during the last ten years with an aggregate growth of 6.3% in the yearly GDP from 2004 to 2013 (Li, 2016). However, the worldwide financial crisis of 2009 created an impact on the Singapore economy leading in slim fall in GDP but Singapore recovered magnificently by recording a marvellous growth of around 15% in 2010.

Definition and explanation of the above indicator in performance measurement

Figure 1: Figure illustrating Singapore GDP growth rate

(Source Tradingeconomics.com, 2016)

Gross domestic product can be defined as the monetary value of all the final product and services produced by all the enterprises under the domestic territory of a nation in a year. Besides resident producers, there are several multinational companies functioning in Singapore hence, the cost of the final products and services are included in Singapore gross domestic product (Ho et al., 2016). The word gross states that no allowance for depreciation has been made in the estimation of domestic product. Being gross, it does not reflect that the real flow of goods and service in the economy. Furthermore, being domestic it represents the monetary value of goods and services manufactured within the domestic territory of the country by its both residents and non-residents.

The per capita income on the other hand, represents the average income of the normal residents of a state in a country. It represents the income per head of populations and it is obtained by dividing the national income of a nation by its populations. The per capital real income is conventionally taken as the index or measure of economic welfare and economic development. It helps in giving the overall picture of average income and the standard of living of the people on average.

The economy of Singapore expanded by 1.8% yearly in the fourth quarter of 2015 which remained unchanged from the third quarter. On quarter to quarter to seasonal adjusted annually based analysis revealed that the economy expanded by 6.2% by extending the growth of 2.3% from the preceding quarter. The manufacture sector contracted by 6.7%%% on annual basis which extended decline of 6% from the preceding quarter of 2015. On a quarterly based analysis, it was evident that the sector contracted by 4.9% which was followed by 6% fall in the earlier quarter (Hsueh et al., 2013). The construction sector expanded by 4.9% annually which was quicker than 3% growth prior to the previous quarter. Growth in construction sector was backed by construction activities of public sector.

The whole sale and the retail segment witnessed a growth of 6.8% yearly with 6.4% in the earlier quarter due to strong performance in the whole sale trade sector. However, on quarter to quarter analysis the sector slowed down to 3.7% from 7.9% in the third quarter. The transported sector experienced fall by 0.9% based on yearly analysis with a reversal 0.4% expansion in the previous quarter (Stevenson & Wolfers, 2013). This was largely due to the weakness in the segment of water transport. Growth in business services sector increased from 0.8% year on year to 2% in the third quarter of 2015 which was largely backed by rental and leasing sector. The sector grew at a seasonally adjusted annualised rate of 1.8% down from 2.5% growth in the earlier quarter.

Explanation of performance trend of the economy

The ministry of trade and industry (MTI) declared a list of measures to improve and sustain the small and medium enterprise (SME’s) to reorganize and attain enlargement. SME can potentially consider the prospect of improving in the areas of production, innovations and ability up gradation. The government announced in the budget of 2013 that it will make an introduction of “productivity and innovation credit” bonus (PIC). Any companies that invest a minimum of $5,000 in the areas of production and innovations will receive a cash bonus of amount equivalent to the amount invested (Room, 2016). In addition to this, PIC can also be used in obtaining licence of Intellectual property. Such measures will enable the SME to claim a tax rebate of 400 or 60% cash payment during the in-license of the IP for business applications. This will enable the SMEs to lower the cost by embarking on modernizations.

Unemployment trends based on employment rates:

A steady fall has been noticed in the Singapore’s employment rate from 3.4% in the year 2004 to 1.9% in the year 2013 except for increase in unemployment due to the global recession of 2008-09. Singapore usually faces unemployment in the form of structural unemployment. To keep in touch with the Singapore’s rapidly developed economy is the shift from a labour intensive economy to the capital-intensive economy. This is unavoidably encountered with the challenge possessed by deficient alternatives of Singapore skill labour force (Markusen, 2013). With Singapore, present move into the biomedical and R&D industries have left workers unemployed due to the reduction in the manufacturing industries as large number of work is outsourced to other developed countries.

Unemployment can be defined as the situation where an individual willing to work and able to work are not able to find work at the current wage rate. There are three main types of employment which are as follows;

Cyclical unemployment: Cyclical unemployment emerges from the urban areas as an outcome of industrial recession. These kinds of unemployment occur due to the large dependency on the external factors of economic growth.

Structural unemployment: Structural unemployment arises due to the high growth rate of the population and slow growth of GDP (Wilkinson, 2013). Thus, the demand for labour and employment opportunities rises due to the restricted growth in agricultural backwardness.

Frictional unemployment: Frictional unemployment can be defined as the unemployment arising out of some personal factors such as preference for different job environment, hunt for work after the completion of school or college education etc.

Government measures to achieve production output performance

In Singapore, there are three of the most common of unemployment prevalent which are as follows;

Cyclical unemployment: Demand oriented unemployment or cyclical unemployment stands as the major reason of unemployment in Singapore this is because Singapore large number of external sector and is highly dependent upon the external demand for its growth of economy. For instance, under the agreement-based manufacturing of electronics, Singapore exports heavily across platform internationally. If the demand for Singapore electronic product falls then the demands for goods and service might get reduced by lowering the cost of production resulting in the reduction of employment.

Structural unemployment: With the advent of globalisation several restructuring activities have occurred in Singapore and this process has led to structural unemployment in Singapore. Singapore has shifted from labour intensive to capital oriented economy which requires certain types of skill (Svensson, 2014). Hence, workers not having required skills are laid off contributing which ultimately contributes to unemployment.

Frictional unemployment: Frictional unemployment in Singapore occurs due to the time taken by the people to discover a new job when they change job or probably consider the new job. Students mainly forms the Singapore’s frictional unemployment as they are one who hunt for work after the completion of school or college education and tends to be frictionally unemployed. 

The government of Singapore adopted to reduce the instances of unemployment in Singapore by promoting the increase of labour force participation of women and older residents. The government of Singapore in an attemptto achieve full employment targeted the service sector as the main driver of employment growth by creating 9 to 10 jobs. The government aims to increase the employment rate by supporting strong hiring of Singaporean workers by adopting flexible work arrangements to draw more women’s and older workers into the work force (Shaikh, 2016).

The overall productivity growth is anticipated to remain even whereas the service demand will continue to be a major area which contributes to employment growth with government measure to increase the demand for skill oriented workforce in retail trade and accommodation industries. These influences will form a central towards upward pressure on wages by opening several hotels and shopping malls.  

Inflation trend in Singapore:

The inflation rate of Singapore averaged around 2.7% annually every year over the last decade. As it is evident in the diagrammatic view, the inflation rate of Singapore experienced a sharp increase in inflation rate during the phase of 2008. The major factors that led to rise in the inflation rate was an increase in GST (Goods and service tax) which was implemented by the government of Singapore (Svensson, 2014). To assist the citizens of Singapore, administer the effect of such hike in inflation rate the government of Singapore offered citizens with the scheme of substantial offsets by pacifying the impact on most of the households.

Labour market analysis

Figure 2: Figure representing Inflation rate in Singapore

(Source Tradingeconomics.com, 2016)

Inflation can be defined as the sustained increase in the average level of price. The main causes of inflation are as follows;

Increased in public spending: Government spending is considered as a significant determinant of over-all spending in any contemporary economy. hence, government forms an important part in determining average demand. Government spending in the recent decades has shown an upward rising trend resulting in inflationary pressure on the economy.

Increased velocity of circulations: The sum value of money used in the economy is the quantity of currency supplied by the government, which is multiplied with the rapidity of the circulations. Peak seasons mainly increases the spending capacity of the companies as it focuses on attaining faster growth rate (Shaikh, 2016). Hence, the rapidity of currency circulations increases leading to excess demand and inflation.

Deficit financing of government spending: If the spending of government is financed by taxation there would not have been much difficulties. Taxation takes away the excess money from the citizens and reduces the force of demand in marketplace. However, the government spending practices increases further than the financed amount of taxation (Room, 2016). To incur the extra expenses government resorts to “deficit financing” by printing money and spending leading to inflation.

The major cause of inflation in Singapore is the “import price push inflation.” Being a small and open economy having limited natural resources Singapore is largely dependent upon its import from overseas nations such as Malaysia and China. This adds up to the export and import expenditures at triple the rate of GDP (Svensson, 2014). This represents that when the inflation rate is relatively higher Singapore ought to be importing them at higher prices which will lead to an increase in price in the given basket of goods. Thus, there will be inflationary situation resulting from “import price push inflation”. 

The government of Singapore combat demand pull inflation by increasing the productive capacity of the economy. The government of Singapore also aims to increase investment in fixed capital measures such as a factories or research and development to discover more efficient ways of promoting production. The government adopted the measure of interest rate policies which targets to influence the aggregate level of demand by affecting the interest rates (Schorfheide & Song, 2015). By increasing the interest rates will cause a decline in investment and additionally leading to decrease in consumption in durable goods such as cars or housing.  

Define unemployment and types of unemployment

Conclusion:

In considerations to the challenges presented to Singapore economy, it should be rightly said that the performance of Singapore over the time of 2005 to 2015 was commendable. After the 2011 general election, the government of Singapore has significantly changed its decision-making approach towards the economy and it is pinioned that the consequences of such decisions would be seen in the upcoming years. Several measures have been put into the place to ensure that cooling down of the property market which will invariably create an impact on the inflation rate along with restricted labour policiesare subjected to create an influence on the labour market.

It is noteworthy to denote that the labour policies will manifest their impact in full circle. In addition to this, Singapore has significantly performed far above the projections made by fledging its economy ever since independence. Several researchers have endowed their faith that the economy of Singapore is anticipated to scale more heights by overcoming its challenges. 

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