Singapore Economic Progress Report

This report provides an analysis of the economic progress of Singapore, focusing on the impact of the trade war between the US and China. It discusses the GDP highlights, labor market trends, price movements, and the risk outlook for Singapore's economy. The report highlights the challenges faced by Singapore, including aging population, inequality, and competition from emerging economies. It also discusses the potential impact of protectionism measures and the need for Singapore to protect its position in the global economy.

Singapore Economic Progress Report
Current Events
The recent event of intensifying trade war between United State and China likely to hurt
economic growth of Singapore. The trade friction between China and United State is heating up due
to mutually triggered tariff. With this, the world is moving closer to experience an all-out trading.
This scenario is going to affect the economy of Singapore. Recently, US has levied 25 percent tariff
on China’s product that worth nearly USD 34 billion covering 818 categories (channelnewsasia.com
2018). China responds to this by imposing a same value of tariff on US goods that include vehicles
and agricultural product. Along with this, protectionism policy of Trump is preparing to impose a
second round of tariff on China’s good.
The trade dispute between two of the top trading partners adversely affects Singapore
acting as a global financial centre and trading hub. The trade friction so far though has a limited
impact but the negative spill over effect is likely to widen at the latter half of the year and beyond
that affecting the overall macroeconomic environment. The electronic segment, which is a
backbone of manufacturing sector of Singapore, is one major area concern following its strong
connection with China in global supply Chain (todayonline.com 2018). Another sector that is
vulnerable to the global economic event is the transportation sector. Singapore possesses one of the
busiest port in the world that connects the western part with Asia. In response to ongoing trade
tension and risks on macroeconomic environment of Singapore has calibrated its monetary policy in
line with a steady evolution of nominal and real economic variables.
GDP Highlights
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
0.00
10000.00
20000.00
30000.00
40000.00
50000.00
60000.00
70000.00
80000.00
GDP per capita
Year
Per capita GDP
Figure 1: GDP Per Capita from 1970 to 2017
Among different categories of consumption expenditure, the two components accounting
largest growth in private consumption expenditure between 2016 and 2017 are clothing & footwear

and Health. The respective rate of growth in clothing & footwear and health during this period are
4.95 and 4.80 respectively.
Labour Market Highlights
1992 1Q 1995 1Q 1998 1Q 2001 1Q 2004 1Q 2007 1Q 2010 1Q 2013 1Q 2016 1Q
0.0
5.0
10.0
15.0
20.0
Unemployment rate, resident unemployment
rate and Citizen unemployment rate
Total Unemployment Rate, (SA) Resident Unemployment Rate, (SA)
Citizen Unemployment Rate, (SA)
Year
Percentage rate
Figure 2: Comparison of total unemployment rate with that of resident unemployment rate and
citizen unemployment rate
 Service and sales professional and craftsman and trad related workers have experienced
largest percentage change in employment between 2016 and 2017. Both the occupation
account a negative percentage change of -6.45 percent and -5.41 percent respectively. This
implies there is a significant decline in employment in the two occupation.
 Clerical support workers has accounted most significant difference in the employment trend
between male and female employment. The female employment in the profession has
remained considerably higher compared to their male counterpart. The difference though
declines overtime, there still remains a large difference between male and female
employment in this occupation.
 Over the entre data period, the occupation category of professionals has the smallest
difference between male and female employment. This is the only occupation where male
employment is close to female employment. There is in fact an overtime-declining trend in
the difference between males and females employment.
 Over the entire data period, proportion of female employment in clerical support workers is
considerably higher as compared to that of male employment in the same profession. The
average female employment for clerical support workers for the entire period has accounted
to be 22.7 percent. The average male employment for the same is estimated as 5.1 percent.
Price Movements

1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Inflation rate for all items and for food items
Inflation rate_all items inflation rate_food items
Year
inflation rate
Figure 3: Rate of inflation for all items and for food items
The trend inflation rate for food and clothing & footwear are relatively less variable
compared to transportation. The food inflation rate varied between -1.49 percent and 9.58 percent.
The range of variation for clothing prices varied between -2.53 percent and 3.41 percent. Price trend
of transportation shows the greatest variation with range varied between -5.09 percent and 14.30
percent.
Risk Outlook
Despite a stable economic condition, Singapore economy faces several domestic and
external challenges. The economy needs to maintain a growth rate of round 2 to 3 percent in order
to maintain status of a high-income economy. Singapore in recent years has recorded a relatively
slower growth due to ageing population, stagnation in the workforce and weak productivity growth.
A second challenge for the economy is growing inequality. Because of persistent high inequality,
there is uneven distribution of economic growth among different groups in the society. This hampers
the living standard of people as compared to advanced economies (Ganesan 2018). A third
challenge for the economy is competitiveness. It is defined as the capacity to give return on
investments, which are superiors to its competitors. The attractiveness of Singapore economy as a
destination of foreign direct investment has been reduced due to growing investment channels to
the Southeast Asian nations. The on going global challenges have been threatened the position of
Singapore as a global economic hub. Position of Singapore in the global economy has been
undermined due to growth of India, China and ASEAN. Increasing competition from China,
competitive nature of Indian manufacturing and growth of emerging economies like Mexico possess
considerable challenge for future position of Singapore economy (Fook 2018). Since the global
financial crisis, there was a tendency for growing protectionism measures to secure countries from
adverse effect of globalization. The administrative approach of Trump to the World Trade
Organization threatens mechanism of dispute settlement requiring smaller countries like Singapore
to protect against larger economies.

References
channelnewsasia.com 2018. With the world ‘moving a little closer’ to a trade war, what’s the impact
on Singapore?. [online] Channel NewsAsia. Available at:
https://www.channelnewsasia.com/news/singapore/with-the-world-moving-a-little-closer-to-a-
trade-war-what-s-the-10501706 [Accessed 12 Feb. 2019].
Fook, L.L., 2018. Singapore–China Relations: Building Substantive Ties amidst Challenges. Southeast
Asian Affairs, 2018(1), pp.321-339.
Ganesan, N., 2018. Singapore in 2017: Structural Changes and Political Challenges. Asian
Survey, 58(1), pp.188-193.
todayonline.com 2018. US-China trade war to drag on Singapore’s economy: MAS. [online]
TODAYonline. Available at: https://www.todayonline.com/singapore/us-china-trade-war-drag-
singapores-economy-mas [Accessed 12 Feb. 2019].