Singapore Economy: Production, Labor Market Analysis Report

This report provides a comprehensive analysis of the Singaporean economy, beginning with an overview of its trade-oriented market economy, its high GDP per capita, and its role as a regional hub. The report delves into the production output performance, examining real GDP growth from 1997 to 2017, including quarterly and year-on-year data, and per-capita GDP figures. It also analyzes the manufacturing, services, and construction sectors, highlighting their contributions to economic growth. The report further investigates the labor market, detailing the unemployment rate, employment trends, and types of unemployment, including cyclical, structural, and frictional unemployment. It concludes by examining the government's measures to promote economic growth and full employment, including targeted employment programs and public investment. The analysis incorporates data from various years and provides insights into the economic outlook and challenges faced by Singapore.

Running head: SINGAPORE ECONOMY 1
Singapore Economy
Name
Institution

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Introduction:
The Singaporean economy displays an exceedingly developed trade-oriented market
economy. The economy is ranked the greatest open one globally, 7 least corrupt country, record
pro-business country, with low rates of taxation of 14% of the Gross Domestic Product.
Singapore is third highest per capita GDP based on PPP (Purchasing Power Parity). The
economy is protuberant FDI outflow financier internationally. The economy has profited from
inward Foreign Direct Investment flow from global investors besides institutions due to the
economy’s appealing investment environment and a stable atmosphere politically.
The economy of Singapore is well referred as the regional hub for the management of
wealth as a result of its electronics, services as well as chemicals exports that avail leading
revenue source. Via such a large revenue, Singaporean economy can buy raw-goods besides
natural resources which it lacks (Economics, 2013). The outlook of this economy seems to have
turned in to being less depressed subsequent to the commencement of year 2017, with first
quarter growth surpassing the estimated figures whereas the administration expecting a greater
GDP estimates in 2017.
The economy remains on the modest growth path. Yet, it is rather inhibited by the array
of anxious imbalances, astonishing suppleness is reappearing. The Singaporean industrial
production has documented additional month of promising growth in April 2007, reinforced by
the protuberant performance in electronic classification besides PMI reading for the quarter 2
hence additionally gesturing the expansionary conditions (Chew, Ng & Fan, 2016). Though, the
latest exports data on the economy of Singapore points towards external demand for its products
cushioning the slowdown of the quarter-one could be chilling, it would then weigh
manufacturing activities.

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Weak wage growth but still huge household indebtedness locally tolerate to confine
private consumption, even in the face of April’s second month of promising growth retail sales to
particular improvement in a row. The expenditure by household has been excruciating from close
correction in houses’ prices since hitting its peak in 2013. This correction appears not to be
easing because of indication that volumes of transaction continually grow.
Production output performance analysis:
The current prices real GDP in Singapore stands at 291.9 billion USD. This has grown
from 100.7% billion USD in year 1997 to 296.97 billion USD in year 2016. It has been growing
averagely at the rate of 6.3% per year. The Singaporean real-GDP propagated 2.5 percent YOY
2017 June following a growth of 2.5 percent in previous quarter. Singaporean real-GDP growth
YOY data quarterly updated from year 1976 to 2017 June indicates a mean rate of growth 7.50
percent. The growth rate of real GDP hit an all-time higher of 19.0 percent in 2010 June and a
record time low of negative 8.8 percent in 2009 March. The Singaporean real-GDP per-capita in
current prices is 51, 431.0 US dollars in year 2017. Singaporean real-GDP per-capita prolonged
from 26, 387.4 billion USD in year 1997 to 52, 960.730 billion USD in 2016 skyrocketing
averagely at the rate of 4.2 percent annually.
The economy of Singapore recovered in quarter-two, however, it declined beneath the
market anticipation. The Singaporean economy resumed the growth in quarter-two of 2017,
primarily on backdrop of the huge manufacturing activities. The upshot followed the contraction
in first-quarter which stood principally wedged by base impacts because of inspiring growth of
quarter-four, and by outmoded Singapore’s GDP numbers volatility. As a result of huge
estimates that the Ministry of Trade and Industry published on 14th July, the GDP grew by 0.4%
in second-quarter from previous quarter at SAAR), likening to first-quarter’s reviewed 1.9%

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contraction (previously reported: -1.30 percent qoq SAAR), yet lessening beneath market
expectations.
The rebirth followed the manufacturing sector hastening besides the reversals in the
services and construction businesses. Manufacturing grew 2.40 percent qoq SAAR, upwards
from the first-quarter mild 0.4% rise. On the other hand, the service industry expanded 0.4% qoq
in second quarter, relative to previous 2.70% construction of the previous year. The construction
industry also recovered in qoq footing, growing 4.3% in 2nd quarter, subsequent to sharp 14.4%
contraction witnessed in first quarter.
The GDP expanded 2.50% in quarter two in year-on-year basis thereby matching the first
quarter‘s revised 2.50 percent growth (past reported: +2.70 year-on-year) alongside Focus
Economics Consensus Forecast. The growth arose following an eighty percent expansion in
manufacturing industry (first quarter: +8.50% YOY), led by the electronics growth and precision
engineering clusters. The manufacturing expansion as indicated in the previous quarter, remained
underpinned by the stronger external demand for the semiconductors alongside being manifested
in encouraging figures for the industrial production that expanded for 10th month in a row in
May.
The service industry growth on YOY terms, augmented from 1st quarter’s 1.40 percent to
1.70 percent in quarter two. Firmer demand superficially accounted for the minor acceleration
hence benefiting transportation and succeeding storage and business service sub industries.
Construction industry on the contrary continued with contraction per annum in quarter 2 and
decreased 5.60% that represent a minor improvement from quarter one’s 6.10% contraction.
Both public- and private sector construction activity continued to weigh on negative performance
of construction industry which is still suffering property prices correction consequences that

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started subsequent to the climax in 2013 and remains gradually demonstrating softening
indications (Seetharaman, Niranjan, Patwa & Kejriwal, 2017). The organizations continued to
benefit from the up-to-date development in global trade alongside huge expansion in the
electronic production happening starting fourth quarter 2016 while more domestic-focused
sectors stayed affected by the gulping conditions domestically.
The Singapore’s economic growth is perhaps to remain lukewarm ahead, drawing from
continuing recovery witnessed in external sector but excruciating from weaker demand locally.
The efficient infrastructure of the Singapore, significantly transparent regulatory environment,
low burden on taxation and steady governance make this economy momentously dynamic and
resilient (Tat & Toh, 2014).
Deteriorating condition in labor market, continuing property market faintness besides
plodding productivity gains is weighing on the spending by household, while low oil prices and
rising interest rates in the US pose downward risks to the economy’s outlook. The Monetary
Authority of Singapore anticipates GDP to cultivate at a rate ranging one- and three percent in
2017. Focus Economics Consensus Forecast (FECF) is protrusive that the economy will grow
2% in 2017 that is unchanged from preceding 2 month. The rate of growth is probable to hasten
somewhat to 2.1%.
The trends in performance of this economy is comprehended via climate change
alongside scarcity of resources, technological advancement, international economic power shifts
alongside swift urbanization. The economy stays within the convergence of China strengthening
its supremacy in trade in both the United States and Asia turning to Asia through its successful
TPP negotiations conclusion. Such chief shifts makes Singaporean economy in a distinct position
for opportunities capitalization. Swift urbanization leads to major implication for Singaporean

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business (Ng & Austin, 2016). Singapore has to view its relationships with regions, economies
and cities.
Government Measures
The government of Singapore has embraced economic growth and development strategy
as the means employed in the achievement of the output performance at level of national under
MTI formulation. Such agencies have led to reformations alongside transformation. The recent
push by Singaporean administration for economic consolidation for stronger sustainable long
term growth is premised on such strategies described in the report of economic strategies
committee in 2010. Accordingly, the administration orients on economic growth via skills
together with innovation. This anchors the economy as an international –Asia Hub.
Analysis of Labour Market
The unemployment adjusted rate in country pegged at 2.2 percent in 2017 March quarter
as compared to preface estimations of 2.30 percent and undistinguishable to preceding quarter.
The unemployment rate stayed at its record high commencing fourth quarter 2010, as extra
individuals entered into labor-force while the total employment contracted mostly starting
second 2009’S quarter. The rate of unemployment in Singapore averaged 2.5 percent from the
2005 till 2017, reaching its all-time high 6.0% quarter one of 1986 and an all-time lowest of 1.40
percent in 1990’s 2nd quarter.

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In three months through March, the rate of an unemployment stayed constant from the
preceding quarter for the residents (3.2 percent) alongside citizens (3.5 percent). A decline of
6,800.0 was witnessed in total employment subsequent to 2,300.0 increment in quarter four and
striking highest quarterly shrinkage commencing 2009’s June quarter. The decline took place in
manufacturing negative 4,300 whereas construction negative 12,500 primarily due to a decrease
in the Work Permit Holders while service industry experienced 9,900.0 increment in the
employment in service sector. About 4,000 employees were laid off, short of 5,440.0 employees
in quarter of December and undistinguishable period the preceding year was positive 4,710.
The manufacturing retrenchments declined (890.00 from 1,990 in third quarter and
reached lowest starting 2015’s second quarter (870.00) while services dropped (2,440.00) from
2,840.00. In contrast, construction documented more layings-off (660.00 from the 580.00).
Services (61 percent) made bigger proportion of all layoffs, primarily in wholesale trade (13.00
percent), financial services (12.0 percent) and professional services (12.0 percent). The rate of

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re-entry among residents caused layoffs to stand at 64.4 percent, compared to 64.7 percent in the
preceding quarter.
The vacancies numbers for jobs (adjusted seasonally) among the private-sector
businesses with a minimum 25 employees while public sector job vacancies declined somewhat
in 2007 March. However, vacancies among small private sector business employing below 25
workers surged bringing the total vacancies for economy to increase to 45,300.00 from
44,500.00 in the third quarter. Accordingly, seasonally adjusted job vacancies to unemployed
people enhanced somewhat subsequent to seven quarters of drop in a row. The seasonally
adjusted rate of employment dropped to 2.1 percent in quarter one of 2017 subsequent to the
uptick in preceding three months. The rate of employment has stood on an overall downtrend
starting third quarter of 2014. In the meantime, the rate of unemployment remained stable at 1.8
percent starting 2016.
Unemployment is indicates a situation in which people that lack jobs, have searched for
the work actively in preceding four weeks cannot land work at predominant wage rate and
remain currently accessible for work. The unemployment types in this economy entail cyclical,
structural as well as frictional. The cyclical unemployment remains the major unemployment
trigger in Singapore economy because the country enjoys an enormous external sector and stays
largely dependent on the external demand for economic growth (Tan, 2015). The electronics
manufacturing in Singapore exports hugely in a global perspective. Companies that produce
electronics face a reduced demand in presence of a declining global demand for electronics.
Because of small size of Singapore alongside its open economy it heavily dependent on exports
thus a decrease in exports, will see Singaporean Aggregate Demand will decrease thereby
shifting leftwards thus sinking national output alongside income, while swelling cyclical

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unemployment. Singapore economy is engaged in enormous restructuring due to globalization,
and during structural unemployment could supervene. Singapore has shifted to capital intensive
from labor intensive economy hence diverse skills are required. Workers who lack relevant
training alongside expertise necessary for moving to the diverse sector are laid off thereby
leading to structural unemployment. The frictional unemployment takes place because much
time is required for people to acquire new jobs where they shifts jobs or looking for appropriate
jobs. Both job creation and destruction presents a need for people to search for jobs and for
businesses to look for workers hence a period lag is observed (Teo, 2015).
Government Measures
The Singaporean government has effected a range of measures to reach full employment.
The administration uses programs of targeted employment to hit full employment. The
government, therefore, has embraced policies that particularly direct jobs to high unemployment
regions. The administration applies public alongside non-profit employment programs thus
establishing jobs via accomplishment of unmet needs (Ling, 2016). The administration is further
utilizing both public investment and infrastructure. The administration has recognized
shortcomings of public investment within broadband; R&D; transportation as well as education.
Accordingly, the administration is embracing sustained public investment programs for job
creation, productivity and growth increase via budget policy as a technique that enables the
government to uplift productivity as well as bring the Singapore’s economy nearer to full
employment.
Analysis of Price Levels
The consumer prices in Singapore arose 1.4 percent YOY in year 2017 March compared
to 0.4 percent upsurge in preceding month and in accordance with the market consensus. This

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stood the highest rate of inflation commencing 2014 June, pushed by upsurge in housing cost
alongside a rapider rise in prices of food. The essential prices of consumer that discriminates the
accommodation alongside private road-transport cost went upward 1.6 percent, subsequent to 1.7
percent gain in preceding month as well as aligning to expectations of market. Based on month-
on-month, the prices of consumer surged 0.3 percent subsequent to a decrease 0.3 percent in
April. The inflation rate in economy stood at 2.65 percent on average from 1962 through 2017,
reaching an all-time high of 34 percent in 1974 March and a record low of -3 percent in 1976
September as indicated below:
Inflation describes a steady rise in general prices levels for the basket of goods and services over
a particular time period. This is triggered by an array of reasons including AD upsurges at higher
rate above AS alongside import price-push inflation.

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Where AD increases swifter than AS observed in diagram overhead, there remains the
tendency that Singaporean economy general level of prices shall upsurge thereby triggering
inflation. Singapore’s inflation is further provoked by import price-push inflation. It remains the
predominant trigger of inflation in this economy. As a small and open economy with less natural
resources, Singapore economy remains heavily reliant on imports from additional economies
including China and Malaysia, with export and import expenditure more than there-times
Singapore’s GDP (Tremewan, 2016). This means that where inflation rate in Malaysia or China
is higher comparatively, the economy import natural resources at relatively greater prices which
consequently provoke an increase in price of a given commodities basket. There will be thus an
inflation as a result of import-price-push inflation.
Government Measures
The government of Singapore keeps the close watch on the development in price of the
consumer from both domestic and imported inflation based on several mitigating measures. The
MAS has permitted Singapore dollar to appreciate to assist in the mitigation of higher import
prices like oil and food. The NEA plans at adopting management models which can assist keep
low costs to ensure prepared food cost are affordable. Retail Price Watch Group keeps the close
watch on excessive increases in price of food and daily necessities. The Ministry of National
Development (MND) has undertaken substantial moves to enhance supply of BTO HDP flats

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alongside private residential property. Regular review of HBD subsidies is done to make sure
that public housing remain affordable for initial buyers. The government has implemented
various demand management means and shall continue the monitoring of housing market. The
government manages tight labor market impacts by working with unions as well as companies to
increase productivity through the improvement in production process of firms and
encouragement of workers to adopt upskilling.
Conclusion
Key areas of economy of Singapore among them analysis of production output
performance, analysis of labor market and analysis of price level have been covered in the
discussion. The Singaporean unemployment has been deeply examined by emphasizing the
trends in unemployment on the basis of rates of unemployment alongside as major types of
unemployment in Singapore. Inflation in Singapore has further been presented in terms of trends
in inflation rate including major triggers of inflation.

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