Singapore

Singapore is a country in South-East Asia with a highly developed open market economy. After gaining independence in 1965, Singapore developed its economy around tourism, financial services, pharmaceuticals, and electronics. The direct involvement of the government of Singapore has resulted in outstanding economic growth, low inflation, and broadly stable currency. The report analyses the development of the increase, unemployment, and growth of Singapore between 2009 and 2019.

Inflation is mainly measured by the Consumer Price Index (CPI). CPI calculates the changes in the price of the services and goods in a basket consumed by the average household (Nyoni, 2019). For instance, the Monetary Authority of Singapore Annual Report 2008/2009 (2020) reported that the inflation rate of Singapore in 2008 was around 6.5% before falling to 2.1% the following year. Likewise, from 2011 to 2015, the Singapore dollar enjoyed strengthening of its position while at the same time, the country recorded a period of deflation – a process opposite to inflation. After reaching its absolute minimum in 2016 at -0.53%, the Singapore dollar local gradually started to inflate again, reaching 0.56% in 2019.

As can be seen from the chart below, Singapore shares a similar inflation trend as compared to the average world indicator. However, world inflation is less volatile and changes between 1.4% to 4.8% between 2009 and 2018, respectively (Rodan, 2016). Again the indicator is increasing in 2009-2011, which is followed by a slight decrease between 2011 and 2016 and followed by a slow recovery up until 2.4% at the end of 2018. Data for 2019 was not available. The level of inflation in Singapore is deficient – less than 1% per year. In general, the standard is widely accepted to be within the norm. However, in the future, it might be unsuitable for the economy. For instance, deflation or meager inflation might be a sign that the demand for goods and services is below its proper level.

Unemployment – is a share of the labor force that is currently unemployed but available for and actively seeking employment in a recent period (World Bank, 2020). The level of unemployment in Singapore has a persistent downward trend with a minor increase between 2013 and 2016 and decreased from 5.86% in 2009 to 3.6% in 2019. Overall, between 2009 and 2019, the average rate of unemployment was around -4%. Similarly, the world average indicator has a descending trend and changed from 5.6% in 2009 to 4.9% in 2019 (Tremewan, 2016). Thus, for the ten years, unemployment in the world transformed by only 0.7%.

The level of unemployment in Singapore is usually low in comparison to other economies around the world. Hence, the Singapore economy creates more jobs than available labor. As a result, productivity level decline as employers recruit available workers who may lack the required expertise and skills. Also, companies may incur higher operating expenses by paying huge wages, which in turn increases the selling prices and eventually increases the inflation. However, Alan Greenspan, the former Fed chairman, developed a monetary policy in the 1990s that enabled employers to actively search for new ways to become more efficient and increase productivity (Mallaby, 2017). He believed that inflation would be under control. His experiment succeeded, and the economic performance of the USA significantly improved. The policy demonstrated that as long as an unemployment rate is around its natural level, there is no need to bring new economic changes.

The annual GDP growth of Singapore in Percentage

From the above graph, the annual Gross Domestic Product (GDP) of Singapore showed a high and robust growth rate in 2010 and increased by 14.5%. After that, the indicator normalized and decreased back to 6.3% in 2011. Between 2012 and 2015, the GDP growth rate slowed down and reached its minimum at 2.9% in 2016. After that, the growth rate started to increase slightly again and reached 3.1% at the end of 2018. It is significant to note that throughout the whole period, the GDP growth rate was positive. As depicted from the above graph, trends of indicators of Singapore differed with the world GDP growth rate that was negative in 2009 (-1.7%) but stayed positive in 2010-2019 and with minor fluctuations reached 2.97% in 2018. Data on 2019 were not published yet.

In summary, it is essential to note that the growth rate of Singapore stabilized after 2015 and was around 3%. Most significantly, the government of Singapore has established strong fiscal and monetary policies that resulted in continuous economic growth and a conducive environment for both short-term and long-term investments. The last10 years have seen a positive economic performance, increased high-value services, and goods and the highest credit rating in Asia. The nation has regular budget surpluses and is in a robust financial position currently. However, the country needs to re-evaluate its macroeconomic policies and strategies that will propel it to higher prosperity in the future. For instance, Singapore must develop its financial services to become the best in Asia. Hence, the nation must continuously educate its workforce, improve the infrastructure, adopt new technology, consistently innovate, and remain politically stable.

References

Mallaby, S. (2017). The Man Who Knew: The Life and Times of Alan Greenspan.

Monetary Authority of Singapore Annual Report 2008/2009. Mas.gov.sg. (2020). Retrieved 3 May 2020, from https://www.mas.gov.sg/annual_reports/annual20082009/index.html.

Nyoni, T. (2019). Predicting CPI in Singapore: An application of the Box-Jenkins methodology.

Rodan, G. (2016). The political economy of Singapore’s industrialization: national state and international capital. Springer.

Tremewan, C. (2016). The political economy of social control in Singapore. Springer.

Unemployment, total (% of the total labor force) (modeled ILO estimate) – Singapore | Data. Data.worldbank.org. (2020). Retrieved 3 May 2020, from https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=SG.

World Development Indicators Database. The World Bank Database. Retrieved from: https://databank.worldbank.org/source/world-development-indicators#