YSS1203 Principles Of Economic

Table of Contents


Write about the Economic Growth of Singapore



Singapore is a free-market country with a strong and well-developed economy.

It has a highly stable and corruption-free environment, higher GDP per capita, and stable prices.

Singapore’s free market economy has attracted significant investments in advanced manufacturing, pharmaceuticals, and medical technology production.

This country’s economic development is largely dependent on the services sector.

They account for 73.4% of Singapore’s Gross Domestic Product (Central Intelligence Agency, 2017).

Electronics, financial services and chemicals are some of Singapore’s top industries.

China, Malaysia and Hong Kong are Singapore’s largest trading partners.

Singapore is also an affiliate of the Association of Southeast Asian Nations, the Asia-Pacific Economic Cooperation, and the Trans-Pacific Partnership. (GlobalEDGE 2017, 2017).

Singapore, like many other countries was also affected by the 2008 and 2009 global financial crisis.

In 2009, the country’s economy went into recession (-0.60%).

The country’s economy grew faster, with a staggering progress of 15.24% between 2010 and 2016, but the 2014-2016 growth rate was still below 3% (The World Bank 2017, 2017).

The government is working to restructure the economy and address the problem of low productivity.

This study examines the economic growth of Singapore between 2005-2014.

The report uses economic indicators such as real GDP, unemployment and real GDP growth rate to examine the economic progress in Singapore.

Analyse of Production Output Performance: Real Gross Domestic Product

The economic measure of an economy’s inflation adjusted commodity prices during a period is called Real Gross Domestic Product.

It provides a broad indicator of economic progress and a key indicator of the economy’s health (Blanchard & Johnson 2013, 2013).

It is an important indicator for economic growth and the government uses it often to develop policies for the economy.

Singapore’s Real GDP (Constant 2010 US$).

Graph 1: Data taken from The World Bank

The chart above shows that Singapore’s real Gross Domestic Product is steadily increasing.

The increase in this measure was somewhat halted in 2008, and 2009.

Between 2005 and 2007, Singapore’s real GDP grew year over year.

There was a slight rise in 2008, while 2009 saw a decline due to the Great Depression.

Real GDP Growth Rate

The GDP growth rate is the annual percentage variation in real gross domestic product of an economy.

Economists use the GDP growth rate to assess the economic performance of a country or compare the economic growth of other countries.

It is also possible to determine if a country is in recession or boom by analyzing the GDP Growth Rate (Blanchard & Johnson 2013, 2013).

Graph 2: Data taken from The World Bank

Between 2005-2007, Singapore’s annual economic growth rate was over 7.5%.

The country’s economic growth rate dropped to 7.5% in 2008 due to the global financial crisis. It then went into recession in 2009.

The country still managed to record the highest growth rate in 2010, at 15.24%.

The growth rate of Singapore has been over 3.5% from 2011 to 2014. (World Bank, 2017).

Real GDP Per Capita

The measure of a country’s economic output per capita is called Real GDP Per Capita.

This measure is calculated by adding the real Gross Domestic Product to the total population of an economy.

To illustrate changes in individuals’ living standards, the GDP per capita is used.

Economists also use the real GDP per person to compare the strength of different economies (Goodwin Nelson & Harris 2014).

Singapore’s Real GDP per Capita (Constant 2010 US$), 2005-2014

Graph 3: Data taken from The World Bank

Between 2005 and 2014, Singapore’s real GDP per capita increased slowly.

Between 2005 and 2014, the real GDP per person in Singapore declined between 2008 and 2009. This was due to the financial and economic crisis that rocked the world.

The economic and financial crisis that shook the world in 2008-2009 led to a decline in real GDP per capita.

However, Singapore’s per capita real GDP has increased yearly since then (The World Bank 2017, 2017).

The government of Singapore has implemented some of its plans to boost economic growth since 2010.

The Economic Strategies Committee was established by the government of Singapore in 2010 with the goal of stimulating economic growth and development.

The committee recommended that the government focus on productivity-driven economic growth.

Singapore has now increased its spending on education and training in order to have the right human resources.

The government’s goal of improving education and training is tied to its efforts to decrease reliance on foreign labor force (Hui 2013, 2013).

The infrastructure plays an important role in the economic development of an area.

Businesses can operate in a more favorable environment if they have access to better infrastructure.

To create a favorable environment, the government of Singapore invests in major infrastructures like roads, rail, bridges and ports (PANG & LIM 2015).

The government also has measures that will increase the capabilities of small and medium-sized businesses (SMEs).

The government offers cash incentives to SMEs for research and development projects (TAN & BHASKARAN 2015).

These plans are crucial in order to promote efficiency and economic progress.

Unemployment and the Typical Types Of Unemployment

Unemployment is a situation in which a person who is able to work and is willing to do so does not get work at the current wage rate.

All countries, regardless of economic rank, are affected by unemployment.

There are three types of unemployment that are most common: structural, cyclical, and frictional. (Arnold 2013, 2013).

When people leave their job in search for better jobs or when graduates are still unemployed after completing their studies, frictional unemployment is what you call it.

The lack of information about available jobs is known to increase frictional unemployment.

Cyclical unemployment is an involuntary form of unemployment that results from insufficient demand for goods or services in an economy.

This type of unemployment is sometimes called Keynesian “demand deficit” and occurs often during economic downturns (McTaggart. Findlay. & Parkin. 2015).

However, structural unemployment can be caused by structural changes such as the introduction of new machines to the workplace. This results in skill mismatches and thus unemployment.

Types of unemployment in Singapore

Singapore is home to both structural and frictional unemployment.

Most importantly, many new graduates in Singapore don’t get employment as soon as they finish their studies. This is called frictional unemployment.

This unemployment is also common in Singapore, where people are constantly changing jobs.

In Singapore, structural unemployment is also a problem, particularly in the manufacturing sector.

Singapore’s manufacturing sector has been hampered by competition from emerging low-cost economies on the international market.

Structural unemployment has been caused by the decline in exports of Singapore due to India’s IT software and China’s manufacturing.

Singapore’s small, open economy is heavily dependent on trade.

This country is more affected by external demand than its internal demand.

The reliance on trade can lead to cyclical unemployment when demand is low in both the domestic and foreign markets (Thangavelu 2012).

Trend in Singapore Unemployment

Graph 4: Data taken from The World Bank

The unemployment rate in Singapore has declined dramatically between 2005 and 2007.

The 2005 unemployment rate in Singapore was 5.59%, while it was 3.9% in 2007.

The worldwide economic downturn in 2008 and 2009 led to an increase in the unemployment rate to 3.96% in 2008 and 4.3% in 2009.

However, the unemployment rate has been steadily declining since 2009.

The Government Takes Measures to Curb Unemployment

Since the Great Depression of 2009, Singapore’s unemployment rate is down significantly.

The unemployment rate in Singapore was 1.69% and 1.83 percent respectively in 2015 and 2016.

This shows that the government has implemented effective schemes to reduce unemployment.

WILSON (2015). The government’s financial support for Small and Medium-sized Enterprises plays a crucial role in reducing unemployment.

This support has facilitated the expansion and growth of SMEs, and thus created jobs.

The leadership of Singapore has also put forward constructive foreign direct investment policies that have helped to reduce unemployment.

These policies are crucial in attracting foreign companies into Singapore and providing jobs for Singaporeans.

The government also established the Singapore Workforce Development Agency to provide labor market information and employment search services.

Companies operating in the country are required to post job openings to Singaporeans for at least two weeks before they apply for foreign personnel (Thangavelu 2012).

Definition and Common Causes of Inflation

Inflation is the steady rise in prices for goods and services within an economy.

Inflation can be caused by either demand-pull or cost-push influences.

These are actions that increase the money supply.

Increase in wages and salaries, as well as government spending such transfer payments and lower borrowing costs, are all examples of demand-pull factors.

Cost-push factors are those that raise the cost of production.

Cost-push inflation is often caused by an increase in labor costs, raw materials, and other crucial inputs, such as oil (Arnold 2013, 2013).

Trend in Inflation in Singapore

Graph 5: Data taken from The World Bank

Inflation in Singapore rose slowly from 2005 to a recommended rate 2% in 2007.

Inflation rose steadily from 2005 to a recommended rate of 2% in 2007. However, it increased to 6.52% in 2008 and then dropped to 0.60% by 2009.

The inflation rate between 2009 and 2014 was between 1% to 5.25% (The World Bank 2017, 2017).

This country experienced deflation between 2015 and 2016.

Inflation in Singapore is caused by both demand-pull as well as cost push factors.

Inflation in Singapore is caused by a decline in borrowing costs, increased credit access, and the purchase of government bonds.

Inflation is also caused by the increase in costs across different sectors in Singapore.

Deflation has been a problem in Singapore for the past two years (2015 and 2016).

Low demand in the economy has led to deflation.

The Government Takes Measures to Control Inflation

To control inflation, the government of Singapore uses both fiscal and monetary policies.

Contractionary policies are employed when inflation is high.

The government can increase the interest rate, reduce government spending, or sell bonds.

During low inflation, or deflation the government may use expansionary tools such as lowering interest rates, increasing government spending, or purchasing government bonds (TAN & BHASKARAN 2015).


Singapore is a free-market country with a strong and well-developed economy.

The remarkable economic growth Singapore has experienced over the past decade is distinct from 2009, when the country was in deep recession because of the Great Depression.

The highest level of economic growth between 2005 and 2014 was 15.24%.

Singapore is also among those countries with low unemployment and high inflation.

The country’s 2014 unemployment rate was 2.80% and inflation was 1.01%.

This country’s leadership has put in place many schemes to ensure economic growth, job creation, and stability.

To create a favorable working environment for companies, the government invests in infrastructures like roads, bridges and rail.

The government also provides the resources necessary to enhance the education and training of the workforce.

To support SMEs’ growth and productivity, cash incentives are provided in the areas of research and development.

Singapore Workforce Development Agency (WDA), which is a government agency, was established to provide labor market information and employment search services via efficient industry networking.

To ensure stable prices, the government uses both fiscal and monetary policies.

Inflation is high when there is a lot of it. The government will use contractionary tools and expansionary measures when there is low inflation.

(2017, August 1)

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The World bank.

The World Bank.

Annual GDP growth.

The World Bank.

GDP per capita (constant 2010 US$).

The World Bank.

Inflation and consumer prices (annual%).

The World Bank.



Singapore Economic Review, 1-25.

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