Gdp Growth for Singapore
Parkin (1998) defines Gross Domestic Product or more commonly known as GDP as ‘the market value of the final goods and services produced within a country in a given time period’.
So what happened prior September to make the economists downgrade their forecast for Singapore’s GDP growth?
‘Singapore’s inflation accelerated to the fastest pace since January as transportation and housing costs increased, maintaining pressure on the central bank to allow the currency to strengthen even as growth falters.’ (Adam et al, 2011)
Due to the sharp increase in housing costs and high COE (Certificate of Entitlement) premiums, the CPI (Consumer Price Index) inflation rate rose to 5.4% in July (Recent Economic Developments in Singapore, 2011). Inflation leads to a rise in the general price level hence money loses its value (Haikal, 2005). Consumers cannot buy as much as they could previously, thus consumer spending will fall, and companies will lower production as demands for goods and services decrease.
In addition, there is growing uncertainties in the global economy, which undesirably affects the GDP growth in Singapore.
With a highly developed and successful free-market economy, Singapore depends heavily on exports, mostly in consumer electronics, IT products, pharmaceuticals and service activities. Our main trading partners are Malaysia, European Union, United States and China (Trading Economics, 2011).
In April to June 2011, due to the exports/imports disruptions from the Japan earthquake in March 2011 and a weaker demand from the advanced economies, Singapore’s economy saw a sequential fall as trade-related activities slackened. The economic growth in Eurozone and US slowed dramatically. Manufacturing activity fell by 23.7% following a 97.2% surge in the preceding quarter. This decline includes both the contractions of electronics and non-electronic products (Trading Economics, 2011).
Singapore’s GDP and Sectoral Growth Rates in 2010 Figure 1.1:
So what happened prior September to make the economists downgrade their forecast for Singapore’s GDP growth?
‘Singapore’s inflation accelerated to the fastest pace since January as transportation and housing costs increased, maintaining pressure on the central bank to allow the currency to strengthen even as growth falters.’ (Adam et al, 2011)
Due to the sharp increase in housing costs and high COE (Certificate of Entitlement) premiums, the CPI (Consumer Price Index) inflation rate rose to 5.4% in July (Recent Economic Developments in Singapore, 2011). Inflation leads to a rise in the general price level hence money loses its value (Haikal, 2005). Consumers cannot buy as much as they could previously, thus consumer spending will fall, and companies will lower production as demands for goods and services decrease.
In addition, there is growing uncertainties in the global economy, which undesirably affects the GDP growth in Singapore.
With a highly developed and successful free-market economy, Singapore depends heavily on exports, mostly in consumer electronics, IT products, pharmaceuticals and service activities. Our main trading partners are Malaysia, European Union, United States and China (Trading Economics, 2011).
In April to June 2011, due to the exports/imports disruptions from the Japan earthquake in March 2011 and a weaker demand from the advanced economies, Singapore’s economy saw a sequential fall as trade-related activities slackened. The economic growth in Eurozone and US slowed dramatically. Manufacturing activity fell by 23.7% following a 97.2% surge in the preceding quarter. This decline includes both the contractions of electronics and non-electronic products (Trading Economics, 2011).
Singapore’s GDP and Sectoral Growth Rates in 2010 Figure 1.1:
References: (2011) Singapore GDP, Trading Economics, New York City, Lisboa, http://www.tradingeconomics.com/singapore/gdp [11 November 2011] Parkin M (2011) Singapore Exports, Trading Economics, New York City, Lisboa, http://www.tradingeconomics.com/singapore/exports [11 November 2011] Ministry of Trade and Industry (2011): Economic Survey of Singapore 2010, Republic of Singapore (2011) Recent Economic Developments in Singapore, Singapore, Monetary Authority of Singapore, http://www.mas.gov.sg/resource/eco_research/eco_dev_ana/Recent_Economic_Developments.pdf [11 November 2011] Quek E Riley C. (2011): S&P rating downgrade: FAQ, CNNMoney, [Online] 7 August 2011. Available http://money.cnn.com/2011/08/06/news/economy/sp_rating_faq/index.htm?iid=EL [25 November 2011] Patrick J Haikal R. (2005): Cost-Push Inflation Versus Demand-Pull Inflation, Investopedia,[Online] 20 January 2005. Available http://www.investopedia.com/articles/05/012005.asp#axzz1fSE5iDKL [25 November 2011] Yip S