Economics -- How a Downsizing Gdp Impacts the Economy of Singapore Essay

In a the latest article simply by Channel Reports Asia old 13 September 2012, it absolutely was reported that Singapore's GDP contracted by simply 1 . 1% on a Quarter-on-Quarter seasonally-adjusted annualized basis, when compared to 9. 4% expansion inside the preceding quarter. The fragile growth energy in Q2 was primarily due to a sequential anxiete in the developing sector. The sector rejected by 6. 0% reversing the 20. 9% development in the earlier quarter. Annex A

Singapore is a economy with high control to GROSS DOMESTIC PRODUCT ratio of 2. 3 times (GDP 2011 was $326B, although total control value in 2009 was $747. 15B) and is also exposed to various external factors, especially financial development within a main foreign trade market. Our main trading partners will be: Malaysia China and tiawan Euro zone USA Indonesia – 14. 9% – 10. 4% – 10. 1% – 6. 5% – on the lookout for. 4%

These 5 regions accounted for 50 percent of Singapore's total trade, of which the united states, Euro sector and Cina contributed 28%. Any unfavorable economic media in these 3 regions could have sizable effect on our economical development.

The united states economy grew at a lesser 1 . 5% in Q2 compared with 1 ) 9% in Q1, which will establishes the fact that the ALL OF US economy keeps growing at an anaemic rate. Moreover Singapore's second largest transact partner the 27-nation Eu (EU) is currently in economic downturn and does not can purchase the equivalent Singapore's goods and services as they do before (demand declines).

In the article, it could be inferred that demand for the exports provides decreased. The main cause can be ascribed primarily to 2 main reasons; 1) The weakening in the economies of your trade companions 2) The strengthening in the SGD

The strength of the SGD has also contributed to Singapore's weak exports. In this aspect it is making export prices uncompetitive. (For similar $ spent, fewer merchandise could be purchased) Conversely a very good currency allows for higher purchasing power which in turn would lead to an increase in imports. Exports to the EU totalled SGD$48. 1 billion recently, while imports from the EUROPEAN reached SGD$57. 9 billion, official info showed.

Singapore's Economy has been resilient amid the global financial slowdown by diversifying throughout a range of sectors which includes oil and gas, drugs and electronic digital. More importantly, Singapore's long term aim of entering high value-added industries just like medical, biotechnology, geno-technology and nano-technology has additionally supported the resilience in our economy.

Before 10 years, ASEAN has developed to turn into a significant and sizeable trading zone within itself besides, NAFTA and Euro sector. It provides countries like Singapore and Hongkong the opportunity to lead the ASEAN effort since the more effective Asian economies.

Although from the article it could be seen that the simultaneous spikes in the electronic devices and pharmaceutical production that increased GDP growth in Q1 aren't sustainable among global require weakness. (Manufacturing sector dropped by six %) Which brings to mind 2 concerns when get worse demand falls what is the possible effects on each of our economy and just how will that affect us? And what is the relationship between aggregate demand and GDP? I shall demonstrate the r/s applying graphs

Aggregate Demand Lower Supply Source

GDP Price Deflator



one hundred ten




Billions money

D2 90 100

Billions $

Genuine GDP

On the current price level of 110, producers are willing and able to promote $100 billion dollars worth of Product. Given, the current condition with our trading partners, the trading lovers do not have the ability to purchase $22.99 billion worth of products; however , they may still be able to purchase a touch at a lower price of $90 billion. When this happens the need curve adjustments leftwards because there is a along with demand, because of this the Price level also falls to meet with the new marketplace equilibrium (Real GDP 80, Price Level 100)

What does this mean domestically in Singapore? When ever demand diminishes while...

Sources: Article; Funnel News Asia Singapore is Q2 GDP shrinks 1 ) 1% on-quarters By Yvonne Chan/Lynda Hong | Placed: 13 Come july 1st 2012 0803 hrs MAS: Money Policy Singapore budget 2009: Resistant package Singapore taps reserves for S$20. 5b economic government plan Annex A Ministry of Trade and Industry (MTI); Gross Domestic Product for 2005 Rates

Annex B Office of Statistics Singapore: Regular monthly consumer price index Annex C Time Series on Twelve-monthly GDP by Current Market Prices


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