Singapore's Macroeconomy Essay Example | Topics and Well Written Essays - 3000 words

Singapore's Macroeconomy - Essay Example Singapore as a country is devoid of natural resources. In its foreign policy, Singapore has incorporated polices to strengthen its relation with the members of Association of South East Asian Nations (ASEAN). Singapore also maintains a strong association with the United Nations Forum for East Asia-Latin America Cooperation (FEALAC) to improve trade relations with Latin America and East Asia. So, from the very beginning, it had focused on the development of capital intensive methodologies for further growth (Australian Government, n.d.). The Nominal GDP of Singapore in the year 2012 was recorded as 276.52 billion dollars (International Monetary Fund, n.d.). This has even surpassed the prediction by IMF, which had forecasted the GDP to be around 270 billion dollars. Analysis of the country’s business cycle The GDP of the country is tabulated in the following table. Table 1: Real GDP of Singapore Year GDP current prices in US Dollars Growth Rate 2000 94.31 9.04 2001 87.70 -1.154 2002 90.64 4.202 2003 95.96 4.58 2004 112.70 9.159 2005 125.43 7.37 2006 145.75 8.764 2007 177.58 8.857 2008 189.96 1.701 2009 185.64 -0.98 2010 227.38 14.76 2011 259.85 4.889 Source: (Econ Stats, n.d.) The above table shows the GDP of Singapore at current prices in US Dollars. This paper has considered the GDP growth over the last ten years. The formula that has been used for the calculation of growth is: Rate of Growth of GDP in current year = (GDP value in current year – GDP value in base year)/ GDP value in year base year It can be clearly seen from the table that Singapore’s GDP has been following an upward trend throughout, except a little slump in 2009. The slump can be explained because of the adverse external environment in the World economy. Since then, the economy of Singapore has made a steady progress as can be seen from the rising trend in the GDP. Figure 1: Graphical presentation of GDP Source: (Authors creation) The graph above gives a visual representa tion of the GDP values. It can be seen from the figure that the economy of Singapore had faced a slump in the GDP growth in 2001. This is primarily because of the fact that the country went into recession in the middle of 2001. The chief reason behind this was the slower growth of the US economy, particularly in the electronic sector, which had slowed down the exports from Singapore to not only the US, but also the rest the European countries (Arnold, 2001). Since then, the economy of Singapore had shown a consistent performance. The main reason behind this exceptional growth was not the increase in total factor productivity, which had mainly driven the growth for other Asian countries. The root of growth and a stellar performance for the Singapore economy was the high level of capital accumulation. The growth can be mainly attributed to the mobilization of resources. The development strategies adopted by the government were strategic and vibrant which had mainly propelled the econo my to its growth. In a research conducted by Professor Vu he, it was found that the contribution of the capital-input in the growth process has been around 47%, while labor contributed to around 36% of