Economic Performance of Singapore: GDP, Unemployment and Inflation Analysis

This article provides an analysis of the economic performance of Singapore with a focus on GDP, unemployment and inflation. It includes tables and data from the World Bank Open Data. The article also discusses the main reasons behind the economic performance of Singapore and the government's measures to maintain full employment.

Running head: ECONOMICS
Economics
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ECONOMIC PERFORMANCE OF SINGAPORE
Introduction
Singapore is a sovereign state city of Southeast Asia. It is also known as the island
country in the world. The country is known for the transition from a developing to the
developed country. This place is also known to be a global hub for entertainment, education,
innovation, logistics, technology, trade and transport. The city had been recognized as one of
the most technology ready nation and also had been ranked as the smartest city in the world,
best investment potential, world’s safest nation and second most competitive nation. The
Singaporean economy is a highly developed as well as a free market economy. The
government linked companies are known to have an essential role in the economy of
Singapore. The economy is also known to be the investment financier in the world. This
place has also benefitted from the inward flow of the foreign direct investment from the
global investors. The robust economy of the Singapore known to drive thousands of global
experts to the shores every year, this particular country is also known to have a financial hub
in the Asia Pacific Region. It has also known to have earned the reputation of the advanced
economies in the world. In the year 2017, Singapore had been ranked as the world’s second
most open economy as stated by Heritage Foundation. The largest industry in Singapore is
the manufacturing sector which is known to contribute more than twenty to twenty five
percent of the annual gross domestic product of the country. The main industry clusters in
Singapore manufacturing sectors comprises of the engineering, logistics, chemicals and
electronics engineering. Aerospace engineering, medical technology and health are the other
flourishing sectors of economy. The performance of the economy of Singapore is shown in
the success of the outward strategy and open strategy of enhancement. The composition of
the exports of Singapore has improved from the labour intensive to products that have high
value. Between the year 2000 to 2010, the gross domestic product of Singapore and has

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known to almost doubled which rose from S$163 billion to S$304 Billion. The economic
achievement of Singapore comprises of various sets of policies that are aimed at maintaining
a conducive environment in term of investment in the economy.
Production output performance analysis
Table 1 REAL GDP OF SINGAPORE
Year
Real
GDP per
capita Real GDP
Real
GDP
growth
2005 40020.26 170716905023.84 0.088602
2006 42223.89 185842757609.09 0.091115
2007 44191.24 202775870920.43 0.017876
2008 42650.1 206400733406.67 -0.00603
2009 41133.3 205155335533.55 0.152404
2010 46569.68 236421782178.22 0.063507
2011 48505.26 251436156949.03 0.040833
2012 49262.33 261703043637.70 0.051111
2013 50948.45 275078914558.12 0.038839
2014 52244.44 285762669600.29 0.022411
2015 52785.31 292166776677.67
(Source: World Bank Open Data | Data. 2019).
The gross domestic product is an extension of assessing the growth of the economy in
terms of the monetary expenditures. When the rate of the gross domestic product is
increasing, it means that the economy is growing. Therefore, it can be said that the gross
domestic product is known as those indicators which is used for gauging the health of the
economy of the country. The gross domestic product reveals the overall dollar value of all
the goods. There are basically two types of GDP, one is the nominal GDP and the other is
Rea GDP. The nominal GDP is the economic outcome of the nation without any kind of
adjustment of inflation while the actual GDP is equal to the economic output which is
adjusted for the effects of the inflation. When the growth of gross domestic product will be
negative in nature, it suggests that the economy is in recession. Therefore, it can be said that
real gross domestic product is comparatively a enhanced index for expressing the result of an

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economy since it considers the fluctuating values of the services and goods when they are
shown in the monetary terms. For this reason, the real gross domestic product is a developed
method of addressing the national economic performance. The gross domestic product kept
on increasing from the year 2005 to 2015. The real gross domestic product of per capita
shows that it was mostly around 4000 to 5000. The real gross domestic product per capita had
been increasing from 2005. However, started to decline in the year 2008 and 2009. After that
it started to increase and rose sharply till the year 2015. From the values of the real gross
domestic product of Singapore, the growth of real gross domestic product had been found
where it can be easily seen that in the year 2008, the value reached negative which there was
no growth and the country might be in not doing well at that time.
In case of Singapore, the economic development and growth strategy at the national
extent is formulated by the Ministry of the Trade and Industry. The real GDP per capita is the
assessment of the total economic output of the nation that is divided by the number of
individuals and is adjusted for inflation. . The components of the gross domestic product
consist of the personal consumption, government expenditure, business investment and the
exports minus the imports.
Labour market analysis
Table 2 UNEMPLOYMENT RATE OF SINGAPORE

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Year
Unemployment
rate (%) Singapore
2005 5.590000153
2006 4.480000019
2007 3.900000095
2008 3.960000038
2009 5.860000134
2010 4.119999886
2011 3.890000105
2012 3.720000029
2013 3.859999895
2014 3.74000001
2015 3.789999962
(Source: World Bank Open Data | Data. 2019).
The situation of actively looking for the employment who are not employed are
termed as unemployment. The unemployment rate is used for evaluating the economy’s
health. The rate of unemployment in case of Singapore had been mostly revolving around 3
percent. The unemployment rate had been the highest in the year 2009, where it was nearly
around 6 percent. Otherwise, it have seen that for maximum years the unemployment rate had
been around 3 to 4 percent.
There are basically three main sorts of unemployment which are structural
unemployment, frictional unemployment and cyclical unemployment. When the economy
experiences many ups and down, it is termed as the cyclical unemployment.
One of the main reasons of unemployment in Singapore is likely to be cyclical
unemployment since the economy is mostly dependent on the external markets. For this
reason, the global recession will be affecting the unemployment of Singapore heavily. When
there will be fall in the global recession it will be leading to lower purchasing power. The
cyclical unemployment is one of the main reason of unemployment in Singapore. The
reason behind this is that Singapore has a huge external sector and is generally dependent on
the external demand for the growth of the economy. As Singapore is an open and small

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economy it is also heavily dependent on exports. For this reason when the exports fall, the
aggregate demand for Singapore will fall and will be shifting to left which will be also
lowering national output and income. This will be raising the demand deficient
unemployment. After globalisation, there is a lot of restructuring in Singapore and for this
reason there is a presence of structural unemployment that generally takes place in Singapore.
Unemployment is typically known to be higher in June since it is at that time when the fresh
graduates enter in to the labour market.
The government in general uses the fiscal measures for achieving the full employment
in order to avoid depression by including compensatory tax policy and government
expenditure policy. Changes in the tax polices along with price stability and economic
growth are some of the measures the government takes for maintaining full employment in
the economy. Reducing the welfare payments, raising the labour productivity and by reducing
the powers of the trade unions can help in achieving the full employment.
Price level analysis
Table 3 INFLATION RATE OF SINGAPORE
Year
Inflation rate of
Singapore (%)
2005 0.425106277
2006 0.96304741
2007 2.104925808
2008 6.627997246

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2009 0.596873455
2010 2.823277186
2011 5.247910208
2012 4.575959852
2013 2.358601146
2014 1.024982528
2015 -0.522752485
(Source: World Bank Open Data | Data. 2019).
The data of the rate of inflation which has been collected from the website of the
world bank shows that the level of inflation had been quite low and then it started increasing.
The year 2008 had the highest level of inflation in Singapore. That Particular year had the
highest rate of inflation in Singapore. The rate then again declined sharply to below one
percent in 2009. After that it achieve ed the targeted rate of 2 percent and then it rose sharply
to 5 percent in the following year. The rate of inflation however, after 2011 started to decline
and in 2015 the rate was negative which suggests recession.
Inflation can also be stated as the decrease in the purchasing power of the currency of
any particular nation. As prices increases, the purchasing power also started decreasing. The
main reason of inflation is the price rise. The inflation is mainly of three types. They are
demand pull inflation, cost push inflation and the Built-in inflation.
The demand-pull inflation mainly takes place when the aggregate demand for the
goods and services in an economy rises swiftly than the productive capacity of the economy.
The cost push inflation occurs when the price of the process of production of the inputs are
known to increase. The rapid increase of the prices of the materials are some of the common
causes of cost push inflation.
The rate of inflation had been quite high in 2008 and 2011. One of the reasons behind
this is that Singapore has a very high import on commodities that really contributes to the

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high rate of inflation can also be stated as the supply shock. The rising labour cost also causes
the wage to rise. Also, more than one million people added to the population of Singapore
recently raising the population to more than four million. The economy also grew by 7
percent per annum. Since huge number of immigrants came in, there had been a huge rise in
population which is also one of the main causes of inflation.
One of the popular methods use by the government to control inflation is through the
contractionary monetary policies. One of the objectives of these types of monetary policy is
reducing the money supply by reducing the prices of bond and by raising the interest rates.
The second tool is reserve requirement which is the sum of money that is required by the
banks to keep on hand for covering the withdrawal. The third process is to directly or
indirectly reducing the supply of money by incorporating various policies that motivate
decline of the money supply.
Conclusion
Therefore, in order to conclude it can be said that Singapore is a developed nation
with strong economic growth. The rate of inflation from the year 2005 shows that it was
mostly under control for most of the years. For most the time the rate of inflation had been
around 2 to 5 percent except for 2008. The rate of unemployment in Singapore shows that is
quite low for the decade and is mostly around 3 to 4 percent. The year 2005 had a high level
of unemployment, otherwise it is quite low for most of the years. The values of the real gross
domestic product of Singapore shows that it is mostly increasing. The gross domestic product
had been increasing from 2005 at an increasing rate. The economic performance of Singapore
can be said to be quite strong in nature.

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