ECO2103 Macroeconomics: Evaluating Global Economic Trends & Issues

This report provides a comprehensive analysis of various macroeconomic factors influencing global economies, drawing upon recent news articles from May 2018 onwards. It examines Singapore's economic growth amidst trade friction, focusing on GDP contributions from key trading partners. The report further investigates Singapore's inflation rates, highlighting factors affecting consumer prices. An analysis of South Korea's economic policies, including minimum wage and working hour adjustments, reveals unintended consequences on employment and income. The study also addresses global financial market volatility, linking it to midterm elections and potential impacts on currencies and commodities. Lastly, the report explores the repercussions of the US-China trade war on South Korea's economy, including reduced growth forecasts and trade protectionism. The report concludes that global economic performance is influenced by various domestic and international macroeconomic parameters and policy changes.

Running head: DMS MACROECONOMICS INDIVIDUAL ASSIGNMENT
DMS Macroeconomics Individual Assignment
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Table of Contents
Chapter 1:...................................................................................................................................2
Chapter 2:...................................................................................................................................3
Chapter 3:...................................................................................................................................3
Chapter 4:...................................................................................................................................5
Chapter 5:...................................................................................................................................6
Conclusion:................................................................................................................................7
Reference:..................................................................................................................................8

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Chapter 1:
a) Source:
SEN, S. 2018. Singapore's economic growth to remain steady in 2018 despite rising trade
friction: MAS chief Ravi Menon. [online] The Straits Times. Available at:
https://www.straitstimes.com/business/economy/singapores-economic-growth-to-remain-
steady-in-2018-despite-rising-trade-friction [Accessed 24 Jul. 2018].
b) Summary:
As per the chosen newspaper report though there is rise in protectionism risk, yet the
economy of Singapore is expected to face and economic growth ranging from 2.5% to 3.5%
throughout the present financial year. Spill over effect of the global trade conflict is expected
to influence the economy of Singapore under (Sen 2018). According to the selected article
US and Chinese trade contribute 1.1% GDP of Singapore and trade flow between EU and US
provide additional .5% to the domestic and .6% GDP is gained through the Canada and US
trade showcasing potential for the economy of Singapore to rise during present year (North
2018).
c) Analysis:
Economy of Singapore is one of the rising economy in the Asian region which is
expected to rise in the coming years under the robust domestic economic performance of the
state. Rise in the productivity along with the technological up gradation has enhanced the
economic performance of the state since last two decades and it has become such an economy
within the Asian regional economy that enjoys almost 74% of its GDP output through the
service sector. Singapore’s economy is experiencing a rise in trade relation with the western
as well as well the Asian economies like China, India and others (Sila nd Ceka 2018). Thus,
depending upon the same, economy of the Singapore is expected to rise at a higher rate in the
present financial year.

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Chapter 2:
a) Source:
Williams, A. 2017. Singapore headline inflation eases to 0.5% in June. [online] The Straits
Times. Available at: https://www.straitstimes.com/business/economy/singapore-inflation-
eases-to-05-in-june [Accessed 24 Jul. 2018].
b) Summary:
As per the chosen newspaper report it can be seen that the overall consumer prices of
Singapore has enhanced by 0.5% during June of 2018 compared to the previous year
depicting a fall from the year-on-year rise in the inflation rate by 1.4%. The report has
highlighted that conservancy charge rebate and timing of disbursement of service has caused
the housing repairs and maintenance cost deteriorating leading to fall in the overall inflation
(Williams 2017). On the other hand, core inflation has raised by 1.5%, yet a lower increase
compared to the same time in previous year.
c) Analysis:
Considering the case of the Singaporean economy, it can be seen that the consumer price
during the present financial year has enhanced by 0.5%, whereas the overall year-on-year rate
has reduced from the prevailing 1.4% change rate depicting easing market situation. As per
the S&CC, this reduction in the inflation rate is the outcome of dragged down repairs and
maintenance cost of the housing sector of the domestic economy (Dany and Garcia 2018). As
per the same source, headline inflation for the 20% income group who earn higher income
has enhanced by 0.1% and for the next 60% of population inflation has increased by 0.6%.
Economic factors like rise in electricity tariff, healthcare service and road tax caused the
same.
Chapter 3:
a) Source:

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The Straits Times 2018. South Korea's policies on wages, hours worked backfire for low-
income workers. [online] Available at: https://www.straitstimes.com/asia/east-asia/south-
koreas-wage-hours-policies-backfire-for-jobless-low-income-workers [Accessed 24 Jul.
2018].
b) Summary:
As per the chosen newspaper article, it can be seen that South Korean president with the
aim to reduce the excess burden on the labours and enhance the youth employment has
reduced the maximum working hours while enhancing the minimum wage (The strait times
2018). However, the said program has backfired and showcased deteriorating employment
scenario in the domestic economy. Additionally, it has been seen that the enhanced minimum
wage has impacted the employment level largely to the low skilled labours. Household
income and per capita of the South Korean economy has eventually fell and situation has
deteriorated further under the slowing down labour mobilization to the Chinese economy.
c) Analysis:
South Korean President, Moon during his presidential election has committed to enhance
job opportunities in the domestic and youth employment will be higher than ever. During
2017 with the staggering 9.8% your employment, forced the president of South Korea to
bring in plans that can enhance the employment while allowing the present workers to earn
higher than before (Pyo 2018). Thus, minimum wage of the workers has been enhanced while
slashing the working hours. It was expected to allow the workers earn more and employment
would get a boost due to the reducing working hours, there will be rise in the labour demand.
Contrary to this, under the enhanced minimum wage, employment has reduced for the low
skilled labours and the workers are getting less income because their scope of overtime and
earning incentive has now gone.

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Chapter 4:
a) Source:
Sheetz, M 2018. Global financial markets on track to have most volatile year since 2008.
[online] CNBC. Available at: https://www.cnbc.com/2018/07/23/global-markets-on-track-to-
have-most-volatile-year-since-2008.html [Accessed 24 Jul. 2018].
b) Summary:
As per the selected newspaper article, it can be seen that since the Global Financial Crisis
(GFC) back in 2008, volatility in the world market is going to be highest during the present
financial year. As per the analysis, 2018 is expected to face more than 25 3-sigma moves
within the world financial market depicting second largest volatility in the market since 2008
GFC (Sheetz 2018). As the result of the same, the report has showcased the CFRA finding
that entails within the four year election cycle, midterm election in the US market showcase
highest amount volatility reflecting fluctuation on the overall market.
c) Analysis:
Midterm election, since Second World War has become one such phenomenon that brings
in large amount of volatility in the market. As it can be seen that during midterm elections,
market volatility remain as high as 106%, which is 10% higher than the pre-election years.
Considering the same theoretical aspect, it can be seen that Moran Stanley tacking depicts
that 3-Sigma events will be highest during the present financial market and it I the second
highest number of fluctuation since 2008 GFC situation (Jorda et al. 2018). 25 3-Sigma
events depicts that there will be varied amount of impact with greater magnitude in all the
currencies ranging from the euro to Australian dollars. Commodities markets will also be
impacted due to the same and the inflation in the coming years is expected to rise due to the
fluctuation in the world price level.

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Chapter 5:
a) Source:
The Straits Times 2018. South Korea minister warns of fallout of US-China trade war.
[online] Available at: https://www.straitstimes.com/asia/east-asia/south-korea-minister-
warns-of-fallout-of-us-china-trade-war [Accessed 24 Jul. 2018].
b) Summary:
As per the selected article, it can be seen that the domestic economy of Korea is expected
to face certain amount of demand crunch during the next years as the trade war between the
US and China has given grim implication on the economy. With the reduced growth forecast
of 2.9% during the present date, it is expected that the economy of South Korea will expand
at a lower rate and the imposition of tariff is going to harm the economy of South Korea (The
strait times 2018).
c) Analysis:
Analysing the report it can be found that the economy of South Korea, is expected to face
lower amount of growth in the coming years under the enhancement in trade war between
china and US. It has caused the Trump government to bring in 25% tariff on the importable
from Chinese economy. China being on the largest recruiter of the labours from South Korea,
reduction in the trade between China and US will hamper the economic performance of South
Korea. Moreover, it can be seen that, there will be hefty tariff on the goods and services from
the Asian market as well showcasing US first philosophy developed by Trump. Exit of US
from the NAFTA agreement has showcased certain amount of trade protectionism act from
the US government leading to fall in the economic growth of the country and crunches to the
demand side economy of the same (Prins 2018).

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Conclusion:
From the above analysis, it can be found that the economy of the different region
around the world is expected to grow under differentiated macroeconomic parameters. Rise
in the GDP rate, fluctuation of the price level and inflation rate as well as movement of the
financial market influence the performance of the domestic economy. In addition to this from
the above analysis it can also be seen that, under the open world scenario, changes in the
policies of trading partners can indirectly impact different economies around the world.

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Reference:
Dany-Knedlik, G. and Garcia, J.A., 2018. Monetary Policy and Inflation Dynamics in
ASEAN Economies. International Monetary Fund.
Jordà, Ò., Schularick, M., Taylor, A.M. and Ward, F., 2018. Global financial cycles and risk
premiums (No. w24677). National Bureau of Economic Research.
North, D.C., 2018. Partnership as a means to improve economic performance. In Evaluation
and Development (pp. 3-8). Routledge.
Prins, N., 2018. Collusion: How Central Bankers Rigged the World. Nation Books.
Pyo, H.K., 2018. The Financial Crisis in South Korea: Anatomy and Policy Imperatives. In
Asian Contagion (pp. 151-169). Routledge.
SEN, S. 2018. Singapore's economic growth to remain steady in 2018 despite rising trade
friction: MAS chief Ravi Menon. [online] The Straits Times. Available at:
https://www.straitstimes.com/business/economy/singapores-economic-growth-to-remain-
steady-in-2018-despite-rising-trade-friction [Accessed 24 Jul. 2018].
Sheetz, M 2018. Global financial markets on track to have most volatile year since 2008.
[online] CNBC. Available at: https://www.cnbc.com/2018/07/23/global-markets-on-track-to-
have-most-volatile-year-since-2008.html [Accessed 24 Jul. 2018].
Sila, I. and Ceka, K., 2018. The Impact of Environmental, Social and Governance
Dimensions of Corporate Social Responsibility on Economic Performance: Australian
Evidence. Computing, 1877, p.0509.
The Straits Times 2018. South Korea minister warns of fallout of US-China trade war.
[online] Available at: https://www.straitstimes.com/asia/east-asia/south-korea-minister-
warns-of-fallout-of-us-china-trade-war [Accessed 24 Jul. 2018].
The Straits Times 2018. South Korea's policies on wages, hours worked backfire for low-
income workers. [online] Available at: https://www.straitstimes.com/asia/east-asia/south-

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koreas-wage-hours-policies-backfire-for-jobless-low-income-workers [Accessed 24 Jul.
2018].
Williams, A. 2017. Singapore headline inflation eases to 0.5% in June. [online] The Straits
Times. Available at: https://www.straitstimes.com/business/economy/singapore-inflation-
eases-to-05-in-june [Accessed 24 Jul. 2018].