Analyses Of Singapore Economy From To 2014-Myassignmenthelp.Com

Question: Analyses Of Singapore Economy From To 2014? Answer: Introduction Economic performance of a country is determined by level of income that is measured as gross domestic product (GDP). Economic performance is as a result of adopted policies by the government. Government economic policies are actions taken by the government to enable efficient functionality of the country economy (Berkmen, 2007). Economic policies moderate ups and downs to adjust and stabilize the economy. Economic policies aim to attain full employment, enhance balance of payments and control inflation. Governments use fiscal and monetary policies to have a sustained and steady economic growth in the country. Monetary policies refer to interest rates regulations by central banks to management supply of money circulating in the economy. Monetary policies aim to achieve full employment, stable economic growth, and price stability. On the other hand, fiscal policies are governments actions to spend or tax to influence and monitor the economy. Fiscal policies aim to expand or contract th e economy and influence aggregate demand of an economy (Chen, 2014). The following paper will analyze labour market, price level, and production performance a case study of Singapore economy for ten years from 2005 to 2014. This will include research on the government measures that were adopted during this time to achieve production output performance, full employment, and stable prices. Background information Singapore has a market economy that is well developed. The country economy is most developed in Asian in terms GDP per capita. Historically, the economy experienced steady growth by 6% per annum from 1965 to 1995. This growth drastically transformed standards of living in Singapore. It is rated as the most competitive, business friendly, dynamic, and innovative economy in world. Singapore economy is the second freest economy in the world to do business. The economy is also among the least corrupt countries in the world. Singapore has more than 7000 multinational companies and 1500 companies that are from china (Villanueva, 2008). The countrys governments operations contribute 22% of the total GDP. Production/Output Performance Analysis The production performance of the Singaporean economy will be analyzed by researching the gross domestic product, GDP per capital and GDP growth rate for a period of 10year. Generally, the economy production performance was stable, steady, and sustained over the years despite recession in 2008-2009. The world economic recession affected Singapore economic performance. The following are analysis and policies that were adopted between 2005 and 2014 to enable steady production performance of Singapore economy; GDP growth rate from 2005 to 2014 The Singaporean economic GDP increased steadily from 2005 with 7.4% to 8.8% in 2006 and 9.1% in 2007. Then, the GDP dropped to 1.7% growth in 2008 and decreased to a negative percentage growth of 0.6% in 2009. The GDP grew to the highest percentage in 2010 reaching 15% annual growth. The economy GDP then decreased to 6.2% in 2011 and reduced further in 2012 to 3.8% per annum. The real GDP grew by 5% in 2013 and decreased in growth to 3.5% ("Singapore | Data", 2015). Real GDP from 2005 to 2014 The Singaporean economy experienced a constant GDP increase from 2005 to 2014. The economy GDP growth for the period was on average by S$228billion. There was a slight decrease in 2009 which steadily increased on the following years with 2014 having the highest GDP of S$284billion. GDP per capita The Singaporean economy GDP per capita increased steadily from 2005 to 2014. The average GDP per capita for the period was S$ 45693.49. There was a slight decrease in 2008 and 2009 that sharply increased to reach it highest in 2014 at S$51865.72. Macroeconomics policies for production/output performance The production performance output in Singapore from 2005 to 2014 was aided by monetary and fiscal policies implemented by the monetary Authority of Singapore. These policies are; First, the Monetary Authority of Singapore (MAS) implemented a gradual and modest appreciation of S$NEER policy that increased capital inflow in the economy. This policy increased the GDP growth in the economy to 7.8% annually. This policy was adapted from 2004 to 2008. The policy sustained growth of the economy and as well as built up inflationary pressures (Daniel, 2014). Secondly, the Monetary Authority of Singapore adopted a neutral policy stance from 2008-2009. This policy was meant to enable the economy survive in the Global Financial Crisis. The MAS also paused the S$NEER appreciation policy during this period (Choy, 2011). Thirdly, the Monetary Authority of Singapore adopted a monetary policy that tightened the cycle in 2010. This monetary policy was meant to enable the economy recover from the 2009 depression in 2009 (Siddiqui, 2010). This policy enabled the economy to pick up. Labour Markets Analysis The Singaporean labour market experienced a decrease in number of unemployment from 2005 to 2007. In 2005, it was estimated that the unemployment level was about 5%. This rate reduced in consecutive years to reach 3.8% in 2007. In 2009, the unemployment rate increased to 4.38. In 2010, 2011, 2012, 2013 and 2014, the unemployment level reduced steadily to lowest average per year of 2.8%. There was an average decrease of unemployment level of 3.61% for the period 2005 to 2014. Types of unemployment experienced in the economy There were three major types of unemployment that were experienced in Singaporean economy for the period between 2005 and 2014. They include; Cyclical, Structural, and Frictional unemployment. Cyclical Unemployment This was the most cause of unemployment in Singapore. This type of unemployment was involuntary and was as a result of lack of demand of goods and services. This unemployment in economy was associated with transition due to business cycles (Wilson, 2015). Unemployment increased when the economy was in recession and reduced when the economy was at boom. When the economy was in recession, many businesses were affected and this led to employees losing their jobs. Employees were laid off and businesses closed. This phenomenon was a result of reduced demand that led contracting output in many industries. Singapore was highly affected in 2009 and 2011 following the world economy recession. This is because Singapore largely depends on export trade and is an open economy. Singapore therefore depends on the external demands for its economic growth and can only retain its employees if there is external demand. Structural Unemployment This type of unemployment in Singapore is as a result of restructuring of the economy due to changes skills requirements. This has mainly been caused by changes from labour intensive to capital intensive economy (Johnson, 2013). The use of machines and automation in the economy led to some workers being retrenched from their workplaces. Organizations prefer to use machines and automation in their production instead of human labour. These phenomena led to structural unemployment in the economy. Frictional unemployment This type of unemployment in Singapore in the economy was experienced due to individuals voluntarily changing from their current jobs in search of new ones. This occurred when individuals feel they are not willing to continue working in their current position and leave to seek for better rewarding jobs (Shin, 2005). This type of unemployment also included students who have finished their studies and are looking for employment. Economic policies to achieve full employment in Singapore The Singapore government has adopted several policies to achieve full employment. These policies include the following; First, the government adopted a fiscal policy to increase productivity of local Singaporean workforce. This policy aimed to manage the foreign workers dependency in the Singaporean economy. This fiscal policy was implemented by upgrading the skills of the workforce. The government in 2010 adopted an initiative that was known as workfare Training Support Scheme (WTS) (Tanzi, 2015). The Scheme provided absentee patrol funding, subsidies, and other related incentives to employers in Singapore in order to encourage employees who were earning low incomes to acquire more skills by training. This fiscal policy allowed up to 95% subsidies to worker to attend for further training ("Economic Survey of Singapore 2013", 2014.) Secondly, the government increased it investment to Continuing Education and Training (CET). This scheme allowed professionals, executives, technicians, and managers to continue with their education. On this account, the government also increased subsidy to full time students who were pursuing degrees and diplomas. Thirdly, the government also invested in the infrastructure required for training and education. This policy was adopted in 2009 by forming several partnerships with higher learning institutions in the country. The government also expanded polytechnics in the lower level. The government also adopted a policy to sustain small and medium enterprises by creating an entrepreneurial environment. This policy was meant to reduce the economy over reliance to the multinational corporations for employment. This policy led to the government getting involved in financing the SMEs by offering financing and partnering with commercial banks to offer debt financial and increase number of SMEs in the economy (Alcidi Gros, 2011). Price Level Analysis The inflation level in the Singaporean economy from 2005 to 2015 was fluctuating. Inflation level from 2005 was 2.2% then decreased to 1.7% in 2006 and hit the highest level in 2007 of 5.8%. In 2008, the economy experienced deflation of -1.49%. This figure increased sharply in 2009 to 3.5%. From 2010, the economy experienced inflation and deflation alternating up to 2014. The economy had an average inflation level increase by 1.27% from 2005 to 2014 ("Measures of Core Inflation for Singapore", 2014). Policies adopted to achieve stable price level in Singapore The Government adopted an exchange based monetary policy to mange inflation in the country. The Monetary Authority of Singapore implemented a gradual and modest appreciating path that was meant for S$NEER. The policy ensured inflationary pressures are built up and economic growth is sustained. This policy was functional from 2005 to 2008. This policy led to S$NEER appreciating by 9.5%. In 2009, the MAS stopped the modest and gradual policy and adopted a neutral policy stance. This policy adoption was in response to Global Financial Crisis. From 2010 to 2014, the MAS readopted it monetary policy that was meant to tighten the cycle. This policy also enabled the economy to recover from the recession and started building up inflationary pressure. The policy enabled the S$NEER to appreciate by 13% (Castro Teixeira, 2014). Conclusion From the analysis of this report, Singapore economic performance increased constantly by 6% from 2005 to 2014. The real GDP also increased constantly with an average of S$228 billion in the same period of time. The GDP per capita of people in Singapore economy increased with an average of S$45693 within a period of 10 years from 2005 to 2014. During this period, the government adapted policies that were exchange based aiming to increase the capital inflow. This increased the production output of the Singaporean economy for a period ranging from 2005 to 2014. Secondly, the report shows that the government was able to reduce unemployment in the economy. The policy adopted reduced the unemployed by an average of 3.6% for a period of 10years from 2005 to 2014. The government adopted fiscal policies that were aimed at investing in training and education of it workforce. These policies enabled citizens to acquire skills that were required in current jobs. The government incentives to SMEs also enabled small business to establish and offer employment. Lastly, the inflation level fluctuated across the 10 years from 2005 to 2014. The government implemented exchange based policies through he MAS to stabilize prices. The S$NEER policies implement enabled the S$ to appreciate or depreciate stabilizing prices in the economy. Therefore, it can be concluded that the Singapore economy is a strong economy and the policies adopted are effective to stimulating a steady growth, stabilize prices and achieve full employment in the econom References Alcidi, C., Gros, D. (2011). Great recession versus great depression: monetary, fiscal and banking policies. Journal Of Economic Studies, 38(6), 673-690. https://dx.doi.org/10.1108/01443581111177385 Berkmen, P. (2007). Precautionary monetary and fiscal policies. [Washington, D.C.]: International Monetary Fund. Castro, A., Teixeira, J. (2014). 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