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# Singapores economic performance

Document Type:Thesis

Subject Area:Engineering

Document 1

According to Singapore Government department of Statistics, seventy percent of the gross domestic product (GDP) nominal value is generated by the service industry while twenty-five percent is produced by the manufacturing and goods retail industries (Singapore Department of Statistics, 2019). For the year ended 2017, Singapore’s GDP was S\$447,284 million. Singapore Department of Statistics (DOS) uses the output, expenditure and income approach to determine the country’s GDP, while the output approach is the most predominant approach. Accordingly, the most significant contributors of the GDP from the goods-producing sector include the manufacturing sector (19. the construction sector (4. According to the World Bank, a high-income economy is one with gross national income (GNI) per capita of above US\$12,055 (World Bank Data Team, 2018). The real GDP as an economic index measures the value of a country’s output adjusted for price changes (Mügge, 2015).

Further, Mügge (2015) observes that economic indicators defy their simple definition as they vary by country, as well the indexes underlying formulae. Figure 1: Singapore’s GDP Components (Source: DOS, 2019) Kryeziu (2016) refers to real GDP as nominal GDP discounted by a GDP deflator. Deflating the GDP refers to the adjustment that transforms the money-value to an index for quantity of total output. Besides, the World Bank and the International Monetary Fund use the real GDP growth rate as a comparison of the standards of living between countries. Figure 2 Singapore GDP from 2004-2014 Real GDP per Capita analysis The real gross domestic product capita takes into consideration the element of the country’s population. To arrive at the real GDP per capita, the country’s real GDP is divided by the country’s population obtained from the official census data of the respective country (Barro, 1991).

The relevance of the indicator is to measure the country’s standard of living. It is important to note that the figure of the index is an absolute figure, and therefore, may not reflect inequalities and gaps in incomes within the population. Notably, most global hedge fund managers and investment bankers relocated from the Wall Street to among other popular destinations Singapore and Switzerland, thereby contributing to the sharp growth in the GDP in the years after the 2008 markets collapse (Bayramoglu and Yilmaz, 2017). That notwithstanding, the country’s economy has continued to grow regarding per capita earnings steadily, except for during the crisis that mostly manifests in the year 2008-2009. Government Policies influencing production output performance in Singapore Among the most notable contributions of the government towards the steady growth of the economy is the government's development of effective regulations governing the conduct of business.

Ortmann and Thompson (2016) argue that the government has achieved and inspired advanced economic industrialization in Singapore by a combination of “authoritarian rule and good governance. Additionally, the government remains committed to a providing long-term investment environment through open governance, minimal corruption, government process efficiency and through the provision of world-class infrastructure services that help Fast track business process. Voluntary unemployment refers to cases where the workers are unwilling to take up jobs at the current market wage rates (Fujita and Moscarini, 2017). Singapore’s economy has three significant forms of unemployment, the cyclical unemployment, frictional and structural unemployment. The country occasionally experiences cyclical unemployment especially in the hospitality, services and manufacturing sectors due to fluctuations in the global demand for products in these sectors, and more so given that Singapore’s economy is more export-oriented.

The country’s labor market is run through imperfect information, liberalization and therefore, there is rampant structural unemployment. The country’s overall unemployment rate is declining steadily in the period from 2004-2014 except for the years 2008/9. Inflation can either be demand pull or cost-push inflation. Demand-pull inflation is mostly caused by the excesses in the aggregate demand against the supply in the economy due to factors such as exchange rate fluctuations, government interventions such as monetary stimulus programs, interest rates manipulation through regulation and rapid economic growth (Basnet and Upadhyay, 2015). The significant causes of inflation in Singapore is the rapid economic growth, immigration pressure due to the country’s open border policy, and the high demand for the country’s financial services products and other products. Additionally, due to the competitiveness of the business environment, the cost of doing business is increasing notably and is a possible cause of inflation (Engel, 2017).