The Economy of Singapore

This article provides an overview of the economy of Singapore, including its high income status, business-friendly environment, and competitive ranking. It discusses the country's development from a low-income to a high-income economy, the key industries contributing to its GDP, and the projected growth in the future. The article also analyzes the production output performance, unemployment rates, and inflation rates in Singapore, along with the government measures to achieve desired outcomes in these areas.

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

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The economy of Singapore
Introduction
Singapore is known to be a high income economy with a huge gross national income.
Singapore is also known to provide one of the world’s most business friendly regulatory
environment mostly for businessmen. It is also known to be ranked among the world`s most
competitive economies. This particular country is also known to develop from a low income
country to a high income country (Chiu, 2018). Singapore have also known to reach full
employment and the manufacturing and service sector of Singapore have been the two pillars
of the high value added economy of Singapore. It is also known as the world’s most
prosperous country where it has strong international links with the international countries.
The largest industry of Singapore is the manufacturing sector which is known to contribute
more than twenty percent of the gross domestic product of the country. The other key
industry clusters include transport engineering, logistics and electronics. The growth of the
Singaporean economy will be growing at a modest pace in the future years which is known to
be supported by more expansionary fiscal stance, stronger investment and sound labour
market which is know to underpin private consumption. Singaporean economy is known as
the highly developed free market economy and has been ranked as one of the most open in
the world. It is also the seventh least corrupted and also has the third highest per capita gross
domestic product. The trade to gross domestic product ratio of Singapore is also known as the
highest in the world.
Singapore in the most modern city of the Southeast Asia. The Singaporean economy
is a highly developed free market economy. The government linked companies in Singapore
known to play an important role in the economy. With the help of monetary policy, the
government is known to maintain the price stability with the help of monetary policy. The

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government is then known to increase the interest rate and control the price which will
therefore control inflation. policy, the government is known to maintain the price stability
with the help of monetary policy (Wurfel & Burton, 2016). The government is then known to
increase the interest rate and control the price which will therefore control inflation. The
government will also create adverse situation in the business which will be increasing the
propensity to save, help in performing open market operations.
Production output performance analysis
Year Real GDP
Real
GDP
growth
rate ( %
)
Real
GDP per
capita
2005
170716905023.
84
7.48915
7
61973.6
9
2006
185842757609.
09
8.86019
6
65386.1
4
2007
202775870920.
43
9.11152
7
68432.6
9
2008
206400733406.
67 1.78762
66046.1
5
2009
205155335533.
55
-
0.60339
63697.2
9
2010
236421782178.
22
15.2403
8
72115.8
4
2011
251436156949.
03
6.35067
3 75113.2
2012
261703043637.
70
4.08329
8
76285.5
7
2013
275078914558.
12
5.11108
7
78896.6
1
2014
285762669600.
29
3.88388
7
80903.5
3

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.00
50000000000.00
100000000000.00
150000000000.00
200000000000.00
250000000000.00
300000000000.00
350000000000.00
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
Real GDP Real GDP per capita
Year
Figure 1Graph of GDP growth
Analysis of the table
The table above shows that values of real GDP, real GDP growth rate and real GDP
per capita. The real gross domestic product in case of Singapore known to have increased at
an increasing rate from 2005 to 2014. The highest rate of the gross domestic product had
been in the year 2014 while the leas was in 2005. The gross domestic product kept on
increasing from 2005. The rate of gross domestic product have only decreased in the year
2009 where the growth rate declined by 0.6 percent. For this reason, the real GDP per capita
in the year have decreased in 2009 from 66046 to 63697. The manufacturing sector of
Singapore is known to contribute a huge rate of the gross domestic product of the country.
The steady growth rate also states that it will be continuing to expand in the recent years.
The huge growth of the gross domestic product of Singapore is known to flourish as a result
of huge amount of foreign labour.
GDP measuring the performance of the economy
The real gross domestic product is known to be the macroeconomic measure of the
economic output which is known to be adjusted for the price change. Therefore, the real

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domestic product is known to be the much better index in order to express the output of an
economy. The real gross domestic product takes into account the value of commodities which
are known to fluctuate in monetary terms (Deng & Gyourko, 2017). As a result of this, the
real gross domestic product is known to provide a better view of the total national output of
the country which will be decreasing the distortions. The real gross domestic per capita
measures the output of the country in the economy which is known to be divided by the
population that is being adjusted for inflation. It have been found out that the per capital
gross domestic product is known to be better indicator of the change in the living standards of
nations. It is also known to serve the informal measure of the prosperity of nation.
Government measures to achieve production output performance
The government of Singapore is known to increase the productivity of the country. it
has been found out that the productivity growth of Singapore has slowed down a lot. the
government can lead to increase in the productivity of the country by finding enough amount
in research and development. It is also advisable for the government to fund for better skills
to the workforce and is also known to create huge competition among them.
Labour market analysis
Year
Unemployme
nt rates
2005 5.59
2006 4.48
2007 3.9
2008 3.96
2009 5.86
2010 4.12
2011 3.89
2012 3.72
2013 3.86
2014 3.74

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0
1
2
3
4
5
6
7
Unemployment rates
Unemployment rates
Figure 2 Graph of unemployment
Analysis of the table
The above table shows the rate of unemployment in Singapore from 2004 to 2015.
From the above table it can be said that the year 2006 have been experiencing the maximum
rate of unemployment which was 5.86 percent. However, the unemployment rate kept on
decreasing after sometime. The year 2012, have experienced the minimum rate of
unemployment in that particular decade. From the year 2011, the unemployment rate kept on
decreasing and were between 3 to 4 percent. The graph also shows that unemployment rate
also did not fluctuate throughout these 10 years and were between 3 to 6 percent.
Different types of unemployment
Unemployment mostly takes place when the workers who are searching jobs are not
being able to find work. The rate of unemployment is known to measure the health of the
economy. Unemployment can be either voluntary and involuntary in nature. The four types of
unemployment are the frictional unemployment, structural unemployment and seasonal
unemployment (Kostakis, Lolos & Sardianou, 2017). The structural unemployment takes
place when there is a mismatch between the skills which are needed and the skills which the

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workers possess. On the other hand, frictional unemployment results when the workers are
known to leave their jobs in the search of new one. The seasonal unemployment takes place
when there is regular changes in the seasons. Lastly, when there is a presence of contraction
phase in the business cycle, it leads to cyclical unemployment.
Unemployment in Singapore
The three most common type of unemployment that takes place in Singapore are the
structural unemployment, cyclical and frictional unemployment. As Singapore have a large
external sector which leads to the demand deficient unemployment. There is also a huge
amount of restructuring in Singapore as a result of globalization. As a result of globalization
there is a result of structural unemployment in Singapore. There is also a presence of
frictional unemployment since people find hard for finding new jobs in order to look for
suitable jobs.
Government measures for reducing unemployment
In order to reduce unemployment., the government can make the use of various
policies for achieving the full employment. With the help of fiscal policy, the government can
achieve full unemployment in the economy and can also reduce the inequality measure in the
economy. One of the main objective of the fiscal policy is reducing unemployment in the
economy. Fiscal policy is known to decrease unemployment by increasing aggregate demand
in the economy along with the increase in the economic growth.
Price level analysis
Year
Inflation
rates

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2005
0.42510
6
2006
0.96304
7
2007
2.10492
6
2008
6.62799
7
2009
0.59687
3
2010
2.82327
7
2011 5.24791
2012 4.57596
2013
2.35860
1
2014
1.02498
3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0
1
2
3
4
5
6
7
Infl ati on rates
Inflation rates
Figure 3 Graph of inflation
Analysis of the table
The above table shows the rate of inflation for Singapore. The graph shows that in the
year 2008, the inflation rate had been the highest which was 6 percent. The rate had declined
sharply, after that to less than 1 percent. The rate of inflation had been very low in both 2005
and 2006. The inflation rate had been highest in 2008. On the other hand, the inflation rate

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had been the least in the year 2005. However, in the year 2014, the rate if inflation had been
very less. In the year 2009, the rate of inflation had been very high which resulted from the
hike in CGST that had been imposed by the government.
Inflation and its types
Inflation is termed as the rise in the price level of the goods and services in an
economy over a certain period of time. inflation is known to be the quantitative measure of
the monetary rate where the price level of commodities rises over a period of time. when
price will be rising, it will be affecting the cost of living for the common public. Inflation can
be either cost push or demand pull. The cost push inflation in Singapore results due to rise in
the labour cost which is known to be quite important in the labour intensive industry.
Demand pull inflation results when inflation is known to rise as the gross domestic product
rises. Another reason of the demand-pull inflation takes place as a result of over expansion of
the money supply.
Government measures to control inflation
With the help of monetary policy, the government is known to maintain the price
stability with the help of monetary policy. The government is then known to increase the
interest rate and control the price which will therefore control inflation. The government will
also create adverse situation in the business which will be increasing the propensity to save,
help in performing open market operations (Goh, 2017).In order to control the inflation in the
economy, the government therefore follows the monetary policy. The government therefore
controls inflation through the contractionary policy. One of the major goal of the
contractionary monetary policy is reducing the money supply within an economy by
decreasing the bond prices and rising interest rate.

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Conclusion
The Singaporean economy is a highly developed free market economy. The year
2012, have experienced the minimum rate of unemployment in that particular decade. From
the year 2011, the unemployment rate kept on decreasing and were between 3 to 4 percent.
The rate of inflation had been very low in both 2005 and 2006. The inflation rate had been
highest in 2008. On the other hand, the inflation rate had been the least in the year 2005.
However, in the year 2014, the rate if inflation had been very less. With the help of fiscal
policy, the government can achieve full unemployment in the economy and can also reduce
the inequality measure in the economy. In the year 2009, the rate of inflation had been very
high which resulted from the hike in CGST that had been imposed by the government.
Singaporean economy is known as the highly developed free market economy and has been
ranked as one of the most open in the world. It is also the seventh least corrupted and also has
the third highest per capita gross domestic product. The trade to gross domestic product ratio
of Singapore is also known as the highest in the world.
The gross domestic product kept on increasing from 2005. The rate of gross domestic
product has only decreased in the year 2009 where the growth rate declined by 0.6 percent.
For this reason, the real GDP per capita in the year have decreased in 2009.
The manufacturing sector of Singapore is known to contribute a huge rate of the gross
domestic product of the country. This country is also a highly developed and successful free
market economy which is known to enjoy an open and corruption free environment with
stable prices. As a result of the global financial crisis, the economy has been known to
contracted a little in the year 2009. The government is known to restructure the Singaporean
economy by weaning its dependence on the foreign labour. The growth of the economy
however, went down a little in the previous years.

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