Economics Assignment on GDP and Economic Growth of Singapore

This Economics Assignment discusses the GDP and economic growth of Singapore, with the help of a news article. It explains the economic conceptual framework and models used to explain the growth of Singapore's economy. The article attributes the high growth rate of GDP to the resilient demand and growing production and technology sector of the country. The electronic boom has also contributed to the growth of the factories of the country along with an increase in the related demands, which in turn has contributed to increasing the current GDP as well as the future forecast of the same.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction............................................................................................................................ 2
Economic Conceptual Framework and Models......................................................................2
Scenario in the economy of Singapore...................................................................................3
Conclusion............................................................................................................................. 7
References............................................................................................................................. 8
Appendix................................................................................................................................ 9

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Introduction
The global economic scenario as well as the economic performance of different
countries depend considerably on the macroeconomic trends and activities in the same over
the time. In this context, the report discusses the GDP and economic growth aspects of an
impressively growing economy in the contemporary global economic scenario, which is the
economy of Singapore, with the help of the news article named, “Singapore economy
edges past estimate, growth broadens”, published on May 24th, 2018 (Asia.nikkei.com,
2018).
As per the assertions of the article, the economy of Singapore, in spite of the
presence of the global trade disturbances and high market risks in the recent period, has
shown significant growth and increased confidence trends. The forecast of the GDP growth
for the concerned country in the current year is between 2.5% to 3.5%, which is greater than
the previous forecast. The article also points out at the high actual growth rate of the GDP of
the country in the recent quarter, the rate being 4.4%, despite of the slowdown of China, the
largest market of the country and the problems faced by Singapore in its international trade
relations with the USA (Mander, 2014). The article attributes this high growth rate of GDP to
the resilient demand and growing production and technology sector of the country. The
electronic boom has also contributed in the growth of the factories of the country along with
an increase in the related demands, which in turn has contributed in increasing the current
GDP as well as the future forecast of the same. The growth in the service sector (4.1%) and
the finance and insurance sector (9.1%) have also contributed to this increase, which is
expected to rise even more with the construction sector gaining back its impetus.
Economic Conceptual Framework and Models
As can be seen from the assertions put forward by the concerned news article, the
GDP of Singapore has been increasing impressively in the recent time period and the
economy has been experiencing both positive as well as negative dynamics in its different
sectors, both internal as well as external, which are expected to have their influence on the
GDP and the economic growth of the country in the future (Mankiw, 2014).
The term Gross Domestic Product, being an indicator of the economic growth of a
country, is the money value of final services and goods which are produced in the country
itself, within usually one year (Burda & Wyplosz, 2013). This in turn shows the overall
productivity and its dynamics in the country with time, which in turn helps in understanding
the condition of the economy as a whole, reflecting on the economic abundance enjoyed by
the population of the country, the employment scenario as well as the consumption and
expenditure patterns of the population of the country.

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The GDP of a country and its dynamics can be explained with the help of one of the
most widely used models of macroeconomic conceptual framework which is the Aggregate
Demand-Aggregate Supply Model. In this model, the Real GDP of the country is determined
as the Aggregate Supply while the aggregate demand is made up of different components.
AD = C+I+G+NX.
Here, C denotes the consumption expenditure, G shows the expenditures done by the
government of the country, I stand for the investments in the economy and NX shows the net
exports (Export volume – Import volume) in the country. The increase in these components
lead to an increase in the AD which in turn leads to an expansion in the GDP of the country.
On the other hand, in this model, an increase in AS also leads to an increase in the GDP of
the country (Johnson, 2017).
The GDP however, does not show the average economic well-being of each of the
individuals of the economy, which in turn is highlighted to some extent by the per-capita
GDP, which shows the per head average economic abundance or income of the residents of
a country at a point of time.
Scenario in the economy of Singapore
As can be seen from the news article considered, the economy of Singapore has been
showing an increase in GDP in recent period, which is evident from the following figure,
showing the GDP dynamics over the last few years:
Figure 1: GDP of Singapore in the last few years
(Source: Tradingeconomics.com, 2018)
The GDP of Singapore has been increasing impressively over the last few years,
which in turn indicates towards an overall robust growth of the concerned economy. This can

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also be seen to be increasing the individual economic welfare of the residents of Singapore
in general, as is evident from the per-capita GDP of the country over the last few years:
Figure 2: Per-capita GDP of Singapore over the last few years
(Source: Tradingeconomics.com, 2018)
The mostly positive and almost linear increasing trend (barring few discrete and
highly temporary negative fluctuations) indicate towards the point that the economy of the
country has been performing impressively well in the last few years (Rodan, 2016).
As per the assertions of the article taken into consideration, much of this increase in
the GDP of the concerned country, which is expected to rise even more in the coming years,
can be attributed to the following reasons:
a. Electronic and other industrial booms and rise in demand
The recent booms experienced in the different sectors of the country, especially in
the industrial sector have been followed by an increase in the scope of employments in the
country:

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Figure 3: Unemployment rate in Singapore over the years
(Source: Tradingeconomics.com, 2018)
This increase in the employment generation has led to increase in the economic
abundance and purchasing power of the majority of the population of the country, which in
turn has resulted in the increase in consumption and investment expenditures, thereby
raising the aggregate demand in the country, which as a result can be expected to have
contributed to the increase in the GDP of the same in the recent years, as seen below:
Figure 4: Increase in GDP due to increase in AD
(Source: As created by the author)

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b. Increase in aggregate supply
The factories of the country can also be seen to be increasing their production, in
response to the increase in the national as well as global demand for their products, which in
turn has led to an increase in the AS in the economy, effects of the same being seen below:
Figure 5: Increase in AS leading to increase in GDP
(Source: As created by the author)
However, with the slowdown of economic growth of China and the turmoil in the trade
relationship with the USA, the exports of the country are expected to fall, which can
decrease the NX, thereby having a credible threat of decreasing the GDP to some extent
(Liow, 2012).

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Figure 6: Threat of fall in GDP due to fall in exports
(Source: As created by the author)
To avoid the same, the government of the country can be seen to strengthen their
trade relationships with other major economies in the world. The industries and service
sectors can also be seen to be working in the aspects of improving their cost efficiencies and
for achieving economies of scale such that they can capture major domestic and global
market share by the virtue of their increased competitiveness in the global framework.
Conclusion
From the above discussion, it is evident that the economy of Singapore is growing at
an impressive rate, which can be seen from the growth dynamics of its GDP, which again is
expected to grow even more in the coming years, owing to the growth in the demand as well
as supply aspects of the country. However, the turmoil in the trade relationship of the country
with that of the USA and the slowdown of its primary market, that is, China, can have
negative impacts on the economic prosperity of the country to some extent. Nevertheless,
the GDP of the country shows positive predictions, mostly due to the resilient demand
structure and supply expansion in the country in the contemporary periods, which is
expected to show the same trends in the coming years.

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References
Asia.nikkei.com. (2018). Singapore economy edges past estimate, growth broadens.
Retrieved from https://asia.nikkei.com/Business/Markets/Nikkei-Markets/Singapore-
economy-edges-past-estimate-growth-broadens
Burda, M., & Wyplosz, C. (2013). Macroeconomics: a European text. Oxford university
press.
Johnson, H. G. (2017). Macroeconomics and monetary theory. Routledge.
Liow, E. D. (2012). The neoliberal-developmental state: Singapore as case study. Critical
Sociology, 38(2), 241-264.
Mander, J. (Ed.). (2014). The case against the global economy: and for a turn towards
localization. Routledge.
Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.
Rodan, G. (2016). The political economy of Singapore's industrialization: national state and
international capital. Springer.
Tradingeconomics.com. (2018). Singapore GDP | 1960-2018 | Data | Chart | Calendar |
Forecast | News. Retrieved from https://tradingeconomics.com/singapore/gdp
Tradingeconomics.com. (2018). Singapore GDP per capita | 1960-2018 | Data | Chart |
Calendar | Forecast. Retrieved from https://tradingeconomics.com/singapore/gdp-
per-capita
Tradingeconomics.com. (2018). Singapore Unemployment Rate | 1986-2018 | Data | Chart |
Calendar. Retrieved from https://tradingeconomics.com/singapore/unemployment-
rate

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Appendix
Link to the news article:
https://asia.nikkei.com/Business/Markets/Nikkei-Markets/Singapore-economy-edges-past-
estimate-growth-broadens

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