Singapore is one of the highly developed economy and it is acknowledged as the most open economy around the world. Continuous growth of the economy since decade has made it one of the fastest growing economy and substantial amount of job creation has enabled it to become a state that is known for the lowest amount of corruption. As per the recent report, the country ranks 7th among all the participating nation in case of corruption ranking that has resulted the business sector of the industry to get enhanced. As per the 2018 estimation Gross Domestic Product (GDP) of the state is 554.9 billion and it is growing at a rate of 3.6% per year (Van, 2016). As per the growth statistics of the state, it can be seen that the economy is moving at a substantial rate during the present date. This report is aimed to study the growth path of the Singapore’s economy utilising the various economic theories and the economic principals. In addition to this, this report will portray the economic growth and the development of the chosen economy utilising an article published recently depicting the economic performance and situation of the Singapore.
GDP growth rate:
Figure 1: GDP growth rate of Singapore
Source: (tradingeconomics.com, 2018)
Considering the figure 1, it can be seen that the GDP growth rate of Singapore has remained moderate over the last once decade with certain amount of fluctuation during 2008 to 2011. As it can be seen that, during 2009, growth rate of Singapore has been falling owing to its dependence on the US economy. During 2008, Global Financial Crisis hit the market and due to the subprime mortgage crisis, economies all around the world faced certain amount of turmoil so does Singaporean economy too. Post 2009, as the market started to face great amount of demand of the trade able from the Singapore’s economy, GDP growth rate started to rise exorbitantly. By the end of 2010, growth rate of Singapore almost touched 40% rate marking itself as the new growth leader all around the world (Morley, 2015). Post 2011, fluctuation in the GDP growth rate started to fall and economy of the Singapore moved forward smoothly. As of now, from the figure 1, it can be seen that the GDP growth rate is at lower side and certain amount of fluctuation is present too.
Figure 2: Inflation rate of Singapore
Source: (tradingeconomics.com, 2018)
Inflation rate is one of the best macroeconomic indicator that defines the growth of the economy through the change in the price in the goods and services. Deteriorating inflation rate defines that the price of the commodities in the economy is falling due to the expansion of the economy and on other hand if inflation rise, then it determines that price of the commodities in the economy is rising and there is fall in the production in the economy (Karanfill & Li, 2015). Considering the figure 2 that depicts the inflation rate of Singapore, it can be seen that the inflation rate of the economy has been falling gradually during the last one decade. As the GDP of the economy rises with the manufacturing industry boom since 2010, inflation rate dipped to its second lowest point during the last decade (Tan, 2016). On the other hand, during 2016, inflation rate reached lowest due to the growth in the electronic industry boom, however, post that inflation rate started to rise again. Economy of Singapore during these days faced stagflation due to the negative inflation rate, however, as of now, it is going smooth with a low amount of inflation rate that depicts, low price of the commodities in the market and better standard of living for the citizens.
Figure 3: Unemployment rate in Singapore
Source: (tradingeconomics.com, 2018)
Unemployment rate is another macroeconomic variable that determines the growth of the economy with the aid of the job creation. As the unemployment rate falls, economy employs more amount of labour that enhance the productivity of the economy (Coale & Hoover, 2015). In addition to this, there is also rise in the participation rate of the economy that enhance the performance of the economy. Considering the figure 3, which showcase the unemployment rate of the economy of Singapore highlights that, the rate of unemployment during the last one decade in the economy has been comparatively lower than its peer nations with certain amount of fluctuation since 2008 to 2010 due to cope of GFC like scenario (Lebang, 2018). With less than 2% unemployment rate in the economy, it can be seen that the economy of Singapore has been moving forward with great pace and the productivity of the economy is also high (tradingeconomics.com, 2018).
Figure 4: Balance of Trade of Singapore
Source: (tradingeconomics.com, 2018)
Figure 4 highlights the balance of trade of Singapore which depicts developing trading scenario of the country. During 2008 to 2010, there has been fall in the balance of trade due to the GFC and since then with the rise in the demand of the Singapore’s goods and services, it started to rise again until 2013, when the economy faced its second balance of trade fall (Chiu, 2018). Post this, with the boom in the electronic sector in the economy, balance of trade started to rise again and presently it has reached to it is moving forward towards a newer high.
Considering the above discussion a general overview regarding the economic performance and development of the Singapore economy has been derived, however, in order to trace the present situation, a recently posted newspaper article can be selected. It would provide greater details regarding the macro economic performance of the chosen economy. For this purpose, article published in Bloomberg with the headline “Singapore’s Economic Growth Misses Estimates” has been chosen that showcase the economic growth of Singapore has been moderate during the 2017. The article highlights that, since 2016, there has been rise in the demand of the electronic products from the economy and in addition manufacturing industry has aided it to have 3.6% annual growth rate, however, with easing market demand trade growth is expected to fall during the next year (Jamrisko, 2018). As per the expectation, manufacturing industry of the state will provide support to the growth of the economy and electronic cluster is expected to provide sustainability to the growth path of the said country.
Figure 5: Factors of growth
Source: (Jamrisko, 2018)
As it can be seen from the figure 5, there has been fall in both the electronic production as well as industrial production during the last quarter of 2017, depicting deteriorating performance of both the sector proving all the previous estimations wrong. Under this situation, the newspaper highlights that, it would be ideal for the government of the Singapore to introduce tighter monetary policy (Greiner et al., 2016).
Conclusion:
From the above analysis it can be found that economy of the Singapore has been moving forward with moderate rate, however, it is facing slight amount of fall in its production path due to the fall in the demand of the goods and services. As per the newspaper article, it would be beneficial for the economy of Singapore to bring in monetary policy so that it can control the recent fall in the balance of trade and growth rate of the economy. To conclude, it can be said that the economy of Singapore has good amount of employment rate and inflation rate is under controllable scenario, thus with the proper policies and limited exposure, it can become one of the largest economy in the world.
References:
Van den Berg, H. (2016). Economic growth and development. World Scientific Publishing Company.
Morley, J. W. (2015). Driven by Growth: Political Change in the Asia-Pacific Region. Routledge.
Tan, A. H. (2016). Economic Prospects of Singapore. In SINGAPORE 2065: Leading Insights on Economy and Environment from 50 Singapore Icons and Beyond (pp. 213-218).
Leblang, D. A. (2018). Political Capacity and Economic Growth 1. In Political capacity and economic behavior (pp. 109-125). Routledge.
Chiu, S. W. K. (2018). City states in the global economy: Industrial restructuring in Hong Kong and Singapore. Routledge.
Singapore – Economic Indicators . (2018). Tradingeconomics.com. Retrieved 14 June 2018, from https://tradingeconomics.com/singapore/indicators
Jamrisko, M. (2018). Singapore’s Economic Growth Misses Estimates. Bloomberg.com. Retrieved 14 June 2018, from https://www.bloomberg.com/news/articles/2018-02-14/singapore-economy-grows-at-slower-pace-than-previously-estimated
Greiner, A., Semmler, W., & Gong, G. (2016). The forces of economic growth: a time series perspective. Princeton University Press.
Karanfil, F., & Li, Y. (2015). Electricity consumption and economic growth: exploring panel-specific differences. Energy Policy, 82, 264-277.
Coale, A. J., & Hoover, E. M. (2015). Population growth and economic development. Princeton University Press.
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