Economic of Singapore

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The unemployment rate is the most common measure of unemployment. The unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force. The labor force is the total number of both employed and unemployed. Unemployment rate is one of the considerable measurement for performance of economic standard because an increasing rate is shown as a signal of economy’s weakening that may call for decrease in interest rate. A decreasing rate, similarly, shows an improvement in economy which is usually followed by higher inflation rate and may call for increase in interest rates as well. There are many reasons to cause unemployment; high population growth, inflation of economics, insufficient rate of economic progress, improving in technology, high skilled labor demand and global competition. Unemployed individuals are not able to earn money to fulfill their financial obligations that cause to increase homelessness and can also happen social problems such as crime. Because of long duration period of unemployment, people can decrease their skills and leading to loss the human capital as well.

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Figure 4 : Singapore’s Unemployment Rate

Singapore’s unemployment rate gradually declined from 4.09 percent in 2005 to 1.7 percent in 2014 but there was a glance increased in unemployment from 2008-2009 because of the effect of global financial crisis. As a result ,Singapore’s economic market depended on global market too. Impaction of global financial crisis effected heavily on unemployment rates that result to cause cyclical unemployment. Beside of that, Singapore had one the highest employment rate all over the world. Singapore was faced by structural unemployment type. There was a rapidly developed in economy that result to move from a labour intensive to capital intensive. This was definitely met with the challenge of unsatisfied substitution of skills in labour force. For example, there was increased in research and development (R&D) and biomedical industries in Singapore economic market, the people who are only able to work in lower level manufacturing industries may cause themselves unemployed. To tackle this issue, Singapore government had largely spend the fund in education and training sectors. Therefore, there were approximately one degree holder in four citizens employed in 2010.

Price Level Analysis

The main purpose of the Consumer Price Index (CPI) is to evaluate inflation in the country. CPI is the measurement of prices changes at the retail level or changes in the cost for a fixed basket of goods and services. Inflation rate is the percentage of price level changes form one year to the next. Demand pull inflation and cost push inflation are the two main causes of inflation. When the demand for good or services is largely increase, the supply cannot meet the demand, so the sellers create the prices that tend to cause inflation. The cost push inflation isn't common as demand-pull inflation, because it only happens when there is a supply shortage together with enough of demand to make the producer to increase price. There are three negative impacts of high inflation; Increasing in the cost of living, falling in the value of money and accumulating of wealth, gaining of debtors and losing of creditors are three major negative impact of high inflation.

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Figure 5 : Singapore’s Real GDP Growth Vs Inflaiton

There was average at 2.7 percent per year of inflation rate from 2005 to 2014 in Singapore’s economy. According to the above figure, Singapore’s inflation rate sharply increased in 2008. This was mainly affected by a hike in GST decided by Singapore government. To help this impact, the Singapore government gave citizens with substantial offsets, lessening this impact on most families. As Singapore is a small country with lack of natural resources or open economy, depended largely on imports from other countries. In fact, Singapore’s economic also depended on Entrepôt trade. So, the depreciation of the Singapore Dollar (SGD) was the important factor to affect inflation in Singapore. Therefore, Singapore’s central bank, the Monetary Authority of Singapore (MAS) has a primary objective to perform price stability through Singapore's version of monetary policy, which is a kind of exchange rate policy.

Conclusion

Even though, physically Singapore is a small nation or lack of natural resources but had greatest performance in the changing economic market. Singapore is one of the high-income country with a gross national income of S$55,150 per capita (Atlas Method), as of 2014. The country performs the world’s most business-friendly regulatory environment for local entrepreneurs and is ranked among the world’s most competitive economics. (http://www.worldbank.org/en/country/singapore/overview). Not only the growth in GDP, it is evident that its strategies in export-import, FDI, unemployment rate, labor force and inflation had provided several benefits and supported the development of economy in Singapore. There were a lot of challenges presented Singapore’s economy, it had to be concluded that Singapore had performed excellently over the 2005-2014 time period discussed. Singapore government had commendably performed the economic sector over the past 10 years. Therefore, Singapore became a corruption free country with a notable open economic environment, stable prices and a per capita GDP higher than that of most western developed countries.

References:

- https://www.edb.gov.sg/content/edb/en/why-singapore/about-singapore/facts-and-rankings/rankings.html

- http://www.tradingeconomics.com

- https://secure.mas.gov.sg/msb/ExchangeRates.aspx

- http://www.mom.gov.sg

- http://www.singstat.gov.sg

- http://www.indexmundi.com/facts/singapore/gdp-per-capita

- http://www.channelnewsasia.com/news/singapore

- https://www.focus-economics.com/country-indicator/singapore/inflation

- http://www.globalpropertyguide.com/Asia/singapore/gdp-per-capita

- http://www.worldbank.org