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Question: Discuss about the Economic Performance Analysis. Answer: Singapore is considered as one of the high-income economy. Average income in Singapore is at per or even greater than that in most developed nation. The economic environment in Singapore is suitable for carrying business operation. There is always a competitive environment in the nation and this shows the countrys reliance on free market strategy. Singapore is an open economy with highly depended on export earnings. Since independence, the country developed at a fast pace and made successful transformation from a comparatively low-income nation to a high-income one. The process of industrialization in Singapore accelerated in 1960s and brought rapid growth for the economy. In this phase, manufacturing sector plays an important role in the growth process. Singapore had achieved the goal of full employment in 1970s and joined the growth path of south East Asian tigers (Taiwan, Hong Kong and South Korea). Secondary and tertiary se4ctor in Singapore are considered as two main pillars of the economy. In general, the country encourages various businesses with particular focus on highly value added services. Present paper presents an overall economic analysis of Singapore for past few years. Major economic indicators such as output, labor market status and price level are given particular focus. In addition to trend analysis for these indicators, evaluation is made on major initiatives taken by the government to improve economic performance. Output performance analysis Gross Domestic Product of a nation captures monetary values of goods and services produced within the nation in the accounting year. GDP can be computed in either current market value or taking market values of a particular base year. GDP computed using base year prices is called GDP at constant price or real GDP. Real GDP is a measure of GDP that is free from inflationary or deflationary consequences in an economy. Thus, real GDP is a more accurate measure of nation output. Growth rate of GDP is the percentage change in GDP. Growth in real GDP gives a measure of real economic growth of the nation. On dividing GDP by total population, per capita real GDP is obtained (Laubach Williams, 2016). This is a measure of nations average income. In order to analyze output performance, growth trend in real GDP and per capita real GDP is considered. Year Real GDP Growth Rate Real GDP Per Capita (US dollar) 2005 7.5 40020.26 2006 8.9 42223.89 2007 9.1 44191.24 2008 1.8 42650.10 2009 -0.6 41133.30 2010 15.2 46569.68 2011 6.2 48439.94 2012 3.9 49000.71 2013 5 50467.84 2014 3.6 51440.82 Table 1: Real GDP growth rate and per capital real GDP in Singapore (Source: data.worldbank.org) Figure 1: Real GDP growth trend in Singapore (Source: data.worldbank.org) Figure 2: Per capita real GDP in Singapore (Source: data.worldbank.org) From the above table it is clearly seen that Singapore has maintained a stable growth rate in its real GDP. The average annual growth rate from 2004-2015 is 6-7%. Exception has been observed only in 2009 when growth rate fell down to 0.6% (Balassa, 2014). The likely cause behind the fall in growth rate is external shock resulted from financial crisis globally. This shows responsiveness of the economy to shocks in external economic environment. However, Singapore did not take much time to make a recovery from crisis. With rapid growth in service and manufacturing sector and increasing openness of the country quick growth recovery is made possible. An outstanding growth performance is observed in 2011 with a notable growth rate of 15.2%. After that, growth trend continues with an average rate of 4-5%. With a steady growth rate and almost stable population, per capita income should be increased. There is no exception of this trend in Singapore as well with a rising trend in per capita i ncome. Per capita income increases from $40020.26 in 2005 to $51440.82 in 2015 (Chew, 2013). In order to increase national output government in Singapore uses the tool of expansionary fiscal policy. Expansionary fiscal policy can be implemented with raising direct government expenditure and reducing tax rates. Singapore government uses both these strategies. In times of global recession, government came forward to revive growth rate. In this time, government launched a resilience program aiming at increasing investment in infrastructure projects (Ali et al., 2014). Apart from focusing on improving infrastructure, increased demand for goods and services in the economy can also raise nation output. The direct channel of increasing demand is to increase the disposable income available in peoples hand. For this, government reduces both income and corporate tax rate. Government also increases transfer payment to boost aggregate demand in the economy. Increase in consumption, government expenditure or invest only partially offsets recession effects resulted from smaller multiplier effect because of low marginal propensity to consume. In Singapore, production driven growth has been given priority. To improve production capacity, fiscal policy is used to affect the supply side of the economy. In this regard, government increases its investment in the fields of training and education to increase human capital investment in the economy. Centres of technical education, polytechnic institutions, and training centres have rapidly increased in Singapore. In order to increase research and development scope in the economy government has recently set up Science and Engineering Research Council (SERC) and Biomedical Research Council (BMRC) (economicscafe.com.sg, 2017). Labour market analysis In order to analyze status of labour market yearly unemployment trend is considered. Year Unemployment Rate 2005 3.1 2006 3.1 2007 2.1 2008 2.2 2009 3 2010 2.1 2011 2 2012 1.9 2013 1.9 2014 1.95 Table 2: Yearly unemployment data in Singapore (Source: data.worldbank.org) Figure 3: yearly unemployment trend in Singapore (Source: data.worldbank.org) In Singapore, performance of labour market is quite satisfactory. Unemployment rate is steadily declined in past ten years. In 2005, the unemployment rate was 3.1%. In connection of government policy, ensure a full employment condition in the economy unemployment rate reached to a 1.95%. In 2009 only, unemployment rate increased from that it is in 2008. This is the consequence of global crisis occurred in 2008 (Battaglini Coate, 2016). This caused cyclical unemployment in Singapore. With a recovery in the growth rate, labour market condition also improved and unemployment rate backed to its declining trend. Unemployment is a condition where some labour in labour force fail finds suitable jobs at existing wage in the economy. There are different reason behind unemployment depending on the structure and composition of the economy. There are several types of unemployment that an economy experiences. Unemployment due to the change in production structure or technology of production in an industry is termed as structural unemployment. People depending on seasonal occupation suffer from seasonal unemployment. During recession, there is a depressed demand in overall economy. This effects performance of labour market and aggravates unemployment problem. This type of unemployment resulted from cyclical fluctuation is called cyclical unemployment (Abdullah Chan, 2016). Other forms of unemployment are disguised unemployment, frictional unemployment, and technical unemployment. Despite having low unemployment rate, Singapore experiences different types of unemployment. In 2008, worldwide recession affected Singapore economy. Overall demand in the economy decreased in this time. As a result, of contraction of the economy demand for labour also decreased and resulted in cyclical unemployment. In order to achieve fast growth rate Singapore continuously makes structural changes in different industries. For this reason, the economy often suffers from structural unemployment. For example, countrys recent move towards Research and Development and biomedical industry low skilled workers are unable to sustain in the industry and become unemployed (Tan, 2016). Other type of unemployment seen in Singapore is frictional unemployment. With a changing composition of the economy, people in Singapore consider switching their jobs. This gives rise to the problems of frictional unemployment. In view of unemployment resulted from lack of skill government in Singapore focuses on training and education program. Heavy investment is made in these fields. The initiatives of government show success in making 23% of labour force degree holder in 2010. This will help the citizens to remain competitive. In order to achieve the goal of full employment government launches different program like PMET program and P-max program (Tremewan, 2016). Apart from solving labour market problem this will also increase national productivity. Employers are given incentives to hire more workers in the economy. Price level analysis Gradual rise in general price level is termed as inflation. Price in the economy pushes up either by the forces of demand or by increase in cost of production. Demand-pull inflation in the economy exists when price increases because of a sudden hike in demand. When production cost increases then supplier increases price of their products (Gal, 2015). The supply side inflation is termed as cost-push inflation. A moderate to low inflation is preferable for the growth of the economy. Galloping inflation is inflation accounts double digit. When galloping inflation persists in the economy without any counteracting measure then inflation rate turns to be very high and is known as hyperinflation. Trend in price level is analyzed by observing yearly inflation trend in Singapore. Year Inflation Rate 2005 0.4 2006 1 2007 2.1 2008 6.5 2009 0.6 2010 2.8 2011 5.2 2012 4.6 2013 2.4 2014 1.01 Table 3: Yearly inflation rate in Singapore (Source: tradingeconomics.com) Figure 4: Inflation trend in Singapore (Source: tradingeconomics.com) From the above table it is seen that price level in Singapore remained more or less stable. In 2005, inflation rate was 0.4%. After 10 years, inflation rate increased only slightly with rate being only 1.01% (Tan, 2016). There is a moderate to low level of inflation in the economy. In 2008, inflation rate increased at a very rapid rate. Recorded inflation rate in 2008 was 6.5% as compared to 2.1 % in the previous year. The rise in price trend is due to increase in good and service tax rate introduced by Singapore government. Other than this year, inflation rate remains manageable. In Singapore, external factors are responsible for existence of demand-pull inflation in the economy. In the GDP composition of Singapore export constitute a major part. Rise of national income of its trading partner increase demand for its export and hence increase aggregate demand in the economy (Wirtz Chung, 2015). An increase in other components of aggregate demand such as investment and consumption expenditure also contributes to a rise in aggregate demand. Cost of production in Singapore raises mainly because of a rise in the price of imported raw material. Because of lack of resource many industries in Singapore depends on imported resources and hence a rise in price of imported good raises overall prices in the economy (Siddiqui, 2016). Monetary authority in Singapore relies on exchange rate policy to achieve stability in price. Singapore is a nation having trade relation with multiple nations. This helps the nation to maintain exchange rate of domestic currency against weighted average of currencies of its trading partners within a stable policy brand. The exchange rate policy in Singapore is used as a proxy measure of monetary policy to control inflation. In the presence of a strong external economies prices goes up without intervention of central bank (Chow, Lim McNelis, 2014). Thus, central bank intervenes by the policy of appreciation of Singapore dollar. The assignment analyses economic performance of Singapore from 2005 to 2014. In all, performance of different economic indicators is good. Economy grows steadily having an overall moderate rate of growth. Only disturbing year in the growth phase is 2008. Economic disturbance in this year is due to external shocks resulted from worldwide recession in that year. Labour market performance is well in the economy. The country is successful in maintaining a considerably low unemployment rate and almost achieves full employment target. Price level stability is another important policy goal of Singapore government. Stability in the price level is a feature of Singapore economy. However, unemployment and inflation rate are also affected by global crisis in 2008. This shows external factor plays an important role in economic performance of Singapore. In order to improve performance of output, employment and price level government designs several policies. Direct tools of fiscal and monetary policy are not very effective in Singapore. Fiscal policy tool like increase in consumption, government or investment expenditure cannot be fully effective because of smaller multiplier effect. Monetary policy is implemented through tool of exchange rate appreciation. Despite being a small economy, satisfactory performance in different economic indicators give the economy an important place in developed counties list. References Abdullah, M. A., Chan, R. K. (2016). Foreign Labor In The Midst Of The Asian Economic Crisis: Early Experiences From Malaysia, Hong Kong, Taiwan And Singapore.Jurnal Kinabalu (eJK),4. Ali, G., Zaman, K., Ziaei, S. M., Anuar, M. A. (2014). 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