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A national economic statistics report of SINGAPORE

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Table of Contents

  1. Introduction. 3
  2. Key national statistics. 3

2.1 Current GDP. 3

2.2 Consumer Price Index. 3

2.3 Inflation rate. 4

2.4 Unemployment rate. 5

2.5 Interest rate. 6

  1. GDP growth and contributors. 6

3.1 Consumption. 6

3.2 Investment 7

3.3 Government expenditure. 7

3.4 Net exports. 8

  1. Trend inflation. 9
  2. Trend of unemployment 9
  3. Conclusion. 9
  4. Recommendations. 10

Harnessing the power of workforce. 10

Focusing on banking and financial industry. 10

  1. Reference lists. 11

Introduction

The economic status of Singapore enables it to earn the acknowledgement of one of the major financial hubs in the Asia-pacific region. The country’s prosperity increases because of its globalized activities in major industries like education, healthcare, entertainment, technology, manufacturing and logistics. The major economic driver of this country is electronic manufacturing goods, machinery, tourism, Insurance and airline for earning foreign currencies. The industrialists are attracted by the country because of its free-market economy where tax is very low, 14.2% of GDP and other advantages like political stability, secured property rights, zero foreign debt and high government revenue.

2. Key national statistics

2.1 Current GDP

The gross domestic Product (GDP) of Singapore is estimated at US$61,766 (nominal; 2018 est.) and US$98,014 (PPP; 2018 est.). This paper reports the economic performance of Singapore in the third quarter of 2018. The economic performance of Singapore has increased by 2.2% in a quarterly basis on a year. The pace of economic performance in the third quarter is slower than the preceding quarter by 4.31%. MTI, The Ministry of Trade and Industry, forecasts the GDP growth of 2018 is at 2.5%-3.5% (The Ministry of Trade and Industry, 2018). This report declares the cause of growth slowdown in the third quarter which is none other than the project slowdown in Singapore’s key demand markets – US and china. This gap is managed by the other sectors such as finance, manufacturing and services which enable the GDP to grow in consistent with the third quarter of 2018. This consistency changes the forecast from 2.5%-3.5% to 3%-3.5% (Trading economics, 2019).

2.2 Consumer Price Index

Consumer Price Index or CPI is a measure which estimates the expenditure of consumers of a country for retail goods and retail services excluding the savings, investment or foreign visitor’s spending. CP indicates the standard of living. It is an economic indicator of prices changes of consumer’s defined product basket. The CPI of Singapore is estimated at 100.10 Index point in November 2019, which reflects an increase from the October 2018, 99.90 Index point (Trading economics, 2019). The CPI denotes the expense of a basket of commodity goods and services throughout the country in a monthly basis. The good and services encompasses the food and beverages, Residential, garments, Transportation, Medicine, Recreation, Education and communication services, other goods etc.  The income tax and social security taxes are not covered by the CPI. The CPI of Singapore shows the declining power of dollar, as the prices has increased.

2.3 Inflation rate

Inflation rate is estimated by the price increase of a pre-determined product basket. It signifies the decreasing of purchasing power of a nation’s consumer or their currency. It is measured in the variation of goods and services. Inflation occurs due to the demand of some good and services, or the change in the supply-chain cost. In October 2018, the annual inflation rate of Singapore rises in 0.7% and remained unchanged from the September. The residential cost and transport cost is in declining rate, while the cost of food and apparels increases at a slower rate. Food inflation is in lowest value compared to the last five months. The overall annual inflation rate is slowed by 7 months and in November rises in 0.3%. The lower inflation rate of Singapore indicates its stability in currency value.

(Trading economics, 2019)

2.4 Unemployment rate 

After the freedom of Malaysia in 1965, the small domestic market of Singapore poses a challenging position in employment. More than 70% residents of Singapore started to live in a filthy condition and 50% of the population was illiterate (Wang, 2018). As a response to this poverty, the economic department of the country opens an economic drive for foreign direct investment, i.e FDI. The government prepares a good entrepreneurial environment by allowing free hiring and firing practices in the labour law; On the other hand, approval for offshore labour is more critical which decreases the unemployment rate of the country. In order to improve the wellbeing of the labour market, the government provides subsidy on residence, transport and medicines. The average unemployment rate of Singapore since 1986 to 2018 stands at 2.44% (Lim, 2018).

(The Ministry of Trade and Industry, 2018)

2.5 Interest rate

According to the economics, interest rate is a leasing charge to the Leander by a borrower in exchange of the use of assets. Interest rate is inversely proportional to the inflation rate. Low interest rate gives more purchasing power to the consumer and leads to the high inflation. The monetary authority of Singapore controls their monetary policy by regulating Singapore dollar, instead of monitoring the interest rates. As per the MTI Forecasts (The Ministry of Trade and Industry, 2018) report, due to the falling prices of Oil in the foreign exchange, the inflation rate of Singapore is decreased; It indicates a high interest rate of the assets in country.  

3. GDP growth and contributors

3.1 Consumption

Economic development is associated with the human activities in consuming the natural resources. Industrial development in Singapore increases the consumption of fossil fuels, oils and electricity as the country is a big hub for manufacturing industry (Lim, 2018). Not only is the manufacturing industry, due to the tourism sector, the country consumes a huge amount of oils used in the transportation. The increasing price of oil prevents the purchasing power of the countrymen and leads to the low consumption of oils (Shahbaz et al. 2017). It consequences an increased consumption rate in electricity and the alternative power plants (Sarwar, Chen & Waheed, 2017).

3.2 Investment

The regional settings of the country Singapore does not favour the country in creating wealth. Therefore, foreign direct investment gains always top most priority for ensuring the economic growth of Singapore. The Singapore government utilizes the public sector as an investor and innovator (Wang, 2018). Being an investment hub, Singapore allows favourable tax to the private firms and derives the wealth from taxation (Yeung, 2017). This economic strategy of Singapore benefits the country by opening international capital movement. The public sector of Singapore helps the privately owned companies by leaving the competitive advantage gaining over them. Singapore allows the investment on telecommunication, entertainment, education, airline services, banking, shipping, public transportation and real estate (Asher, 2017).

3.3 Government expenditure

Government expenditure denotes the public spending on the goods and services and it is an important element of GDP. This tool influences the economic growth of the country as the government expenditure policies set the budget target for expenditure, adjusts the taxation and increases the public employment and expense. According to the data of 2018, the highest individual income tax rate of Singapore is 22%; the highest corporate tax rate is 17% (Hers et al. 2018). The average tax burden is equivalent to 13.6% of the total domestic income (Layton, Robinson, & Tucker,  2017). Abdullah & Rusdarti (2017) point out that the average government expenditure of last three years is equalized to 17.69% of GDP and the budget surpluses are equalized to 4.1% of GDP.

(Asher, 2017)

3.4 Net exports

Singapore has ranked as the 20th largest export nation in the world. It gains the trade surplus or trade balance of 3799.41 Million SGD in November of 2018 (Trading economics, 2019). In 2016, the country extracts a negative trade balance of $71.1B but recovers the gap fasts (Sarwar, Chen & Waheed, 2017). The average trade balance of Singapore is 881.78 Million SGD from 1964 to 2018 (Trading economics, 2019). The major exporting items of Singapore are Computers, Petroleum, Gas tube lines, chemical compounds etc. The export destinations of Singapore are china, Malaysia, America, Indonesia and Hong Kong; while china, Malaysia and North America are also their importing partners. 

4.Trend inflation

Trend inflation is a long term inflation or unchanged inflation rate. The economy department of Singapore forecasts the average inflation rate of 2019, which is 1.3% and will be remained unchanged until 2022.

5.Trend of unemployment

Amidst the economic slowdown due to the recession, the employment rate is not decreased in Singapore. At the end of 2001 it increases 4% unemployment rate and within 2012, it has been reduced into 2.4% (Layton, Robinson & Tucker, 2017). As the government offers employment to the retired persons from 2016-2019, the trend of unemployment is expected to be reduced into 1.9% (Trading economics, 2019).

6.Conclusion

However, without having any significant natural resources, Singapore has managed to be a regional hub of gas and Oil along with its international leadership on sustainable water solution project. The main source of government revenue is the taxes regarding property, income, excise, custom duties and GST; the other sources are derived from permit fees, license, rental property, fines and forfeitures and capital goods.

7.Recommendations

Harnessing the power of workforce

The natural resources of Singapore are its People. This report recommends harnessing the power of their workforce knowledge and skills for developing the economy of the country.

Focusing on banking and financial industry

Singapore is the abode of more than 200 banks and many global financial firms. It has boosts the manufacturing industry of Singapore by its financial advices. This report recommends focusing on facilitating the global and regional industries through the transfer of knowledge and earning international capital.

8.Reference lists
  • Abdullah, M. A., & Rusdarti, R. (2017). The Impact of Government Expenditure on Economic Growth in Indonesia, Malaysia and Singapore. Journal of Economic Education6(1), 11-18.
  • Asher, M. G. (2017). Some aspects of role of state in Singapore. In Singapore (pp. 3-25). Routledge.
  • Hers, J., Witteman, J., Rougoor, W., & van Buiren, K. (2018). The Role of Investment Hubs in FDI, Economic Development and Trade.
  • Layton, A. Robinson, T. & Tucker, I.B. (2017),  Economics For Today. 6th. Singapore: Printed in Singapore by 1010 Printing Group Limited.
  • Lim, L. (2018). Back to the Future: Singapore, China and Southeast Asia.
  • Sarwar, S., Chen, W., & Waheed, R. (2017). Electricity consumption, oil price and economic growth: Global perspective. Renewable and Sustainable Energy Reviews76, 9-18.
  • Shahbaz, M., Sarwar, S., Chen, W., & Malik, M. N. (2017). Dynamics of electricity consumption, oil price and economic growth: Global perspective. Energy Policy108, 256-270.
  • The Ministry of Trade and Industry (2018). MTI Forecasts GDP to Grow by “3.0 to 3.5 Per Cent” in 2018 and “1.5 to 3.5 Per Cent” in 2019, Retrieved from: https://www.singstat.gov.sg/-/media/files/news/gdp3q2018.pdf (Accessed on : 15th Jan, 2019)
  • Trading economics (2019). Singapore Consumer Price Index (CPI), Retrieved from: https://tradingeconomics.com/singapore/consumer-price-index-cpi  (Accessed on : 15th Jan, 2019)
  • Trading economics (2019). Singapore GDP Growth Rate, Retrieved from: https://tradingeconomics.com/singapore/gdp-growth (Accessed on : 15th Jan, 2019)
  • Wang, J. (2018). Innovation and government intervention: A comparison of Singapore and Hong Kong. Research Policy47(2), 399-412.
  • Yeung, H.W.C., 2017. The political economy of transnational corporations: a study of the regionalization of Singaporean firms. In Singapore (pp. 57-84). Routledge.

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