Analysis of Singapore’s GDP and Inflation figures Essay

According to the above forecast of gross domestic product ripening of capital of Singapore, we enjoy that it stand at 5.3% instead of 6.2% earlier. Therefore, it clearly indicates that the forecast of Singapores GDP growth downgrade.Gross Domestic Product, it refers that during a period of time, the issue of altogether final goods and labor value from the parsimoniousness of a atomic number 18a or region, it is often recognized as the best index to app fig out subject sparingal conditions. It not only reflects a earths economic performance, but also reflects a realms national strength and wealth.The importance of GDP so-and-so not be ignored, peculiarly when it is menti angiotensin converting enzymed in the same breath with foodstuff expectations, the actual economic growth rate or recession rate often affects the trend of fiscal markets. The gameer the data shows that the much(prenominal) driving economic growth.GDP represents all the economic activity within the country, reflects the basic situation for economic growth, it is utilize to analyze current status of the states economic development. GDP growth decelerated, indicating that the scrimping is in capsule phase, consumer subscribe of the production exit decrease. In general, the spunkyer GDP of Singapore means the better economic development, rising interest rate, its currency exchange rate is strong.There ar so many incompatible elements that affect the GDP growth of Singapore, in my opinion, one of the reasons is global economy. As a result of the global economic downturn, the economy of Singapore has been shrinking dramatically. Singapores economy can not maintain the pace of strong growth in 2010, because Singapores economy is mainly dependent on exports and exports of non-oil products and services, they occupy for more than half of its GDP, which makes the economy vulnerable to changes in global economic growth. Moreoer, late GDP data revisions in the US showed that eco nomic conditions were not as robust as previously thought indeed, merge activity had stal conduct since 2010. precariousness of U.S. economic recovery and the proportional recession in the global electronics market has also led to further downturn in Singapores export demand. As reduction of global demand, as the pillar constancy of Singapore, exports of electronic products sharply shrinking is the main reason of the countrys economic downturn. Singapore is one of Asias fastest growing economies. This year, the U.S. economy maybe diminution in growth rate and the global electronics manufacture may decline are the main danger facing by Singapores economy.The Monetary Authority of Singapore states domestic economic activity fell by 6.5% in the second quarter of 2011. The contraction was led by a slowdown in trade-related activities, due to yield-chain disruptions from the japan earthquake and weaker demand from the advanced economies(MAS, 2011). Economic growth was weak in the 2011, reflecting the impact of transitory shocks such as higher oil prices and the Japanese earthquake.A strong dollar allow for stimulate GDP by discouraging exports and encouraging imports, says Bob McTeer, former pre billetnt of the Federal take into account Bank of Dallas.Monetary factors also affect GDP. The U.S is one of Singapores major trading partners, the U.S. dollar exchange rate continued to decline, the relative value of Singapore dollar increase, but Singapore is a country need to reserve more foreign currency, which means it needs more exports, exporting more production needs to undervalue its own currency. Therefore, the decline in the dollar also affected Singapores exports, led to GDP growth declined.Question 2In my opinion, I reserve with the statement without a doubt. The main aim of the brass is to reduce high ostentatiousness to keep balance.Inflation, a monetary phenomenon, is an increase in property and credit. Its major consequence is raising prices. Inflation occurs when the economys aggregate volume of money expenditures grows at a faster rate than its broad(a) real output grows. Inflation is thus an increase in the supply of money without a corresponding increase in the supply of goods and services. (Edward, 2000)The authorized measure of the inflation is the increase of the general level of prices measured over a period of time, and RPI or CED is used as a measurement. To explain how it does this I must first explain the main two different causes of inflation.First type of inflation is called cost-push inflation. It basically means that increasing be of factors of production (wages, rent interest, cost of raw materials, increased normal make requirement) push up the general level of prices. This applies to the aggregate supply side of the economy and a matures partly because general wage costs a plagiarise, for example the regent(postnominal) trade unions might have pushed up wages without increasing the productivity. significance prices play a role as well, because nowadays no country is independent of the others. When a country has lower inflation than others it tends to import inflation with its foreign trade because foreign goods get more expensive. Also, for example, the massive rise in oil prices affected western oil-importing economies and caused inflation. The changing exchange place also cause inflation. As the production costs of the firm rise it has to increase its price to cover the costs. Then in turn, as the goods are expensive, labour demands wage increases that will increase the production costs in time further.Another type of inflation is demand-pull inflation. This occurs when aggregate demand exceeds the value of output at full employment.The role of government is to ease pressures from inflation it takes permit monetary insurance or fiscal policy to reduce high inflation based on different types of inflation. The government has several ship canal to control inflation. It c an do this by using fiscal policy that manages the aggregate demand by using government spending and monetary policy to reduce investment, consumption and the circulation of the currency.Fiscal policy government should raise tax rate and reduce expenditure, for example, raising consumption tax, it makes goods more expensive, so you need to pay more consumption tax when you buy something, it will make you reduce the number of purchasing things. Thus, the total market demand will reduce at a certain level, making the boilersuit price fall, playing an alleviative role to high inflation.Main limb to fight against inflation after 1970 has been monetary policy, widely used by Conservatives. The main policies have included controlling interest rates and medium-term pecuniary strategy. Also the real inflation is much caused by peoples expatiation on future inflation, reducing the expectations of inflation in the future has been one of the governments aims.The consequences of inflation are quite serious. It has bad effect on growth, because it increases skepticism and discourages savings. It is also damaging for the balance of payment, because it makes imports cheaper. It distributes incomes in favour of profit earning, by from fixed earning pensioners, whose real income will fall. Therefore, government must play mobile role in managing high inflation rate by an economy all the time.References1. The Monetary Authority of Singapore, Recent Economic Developments in Singapore, 01 family 2011, pp 01 01 Dec. 20112. Bob McTeer, Impact of a Weak Dollar by Admin, post in Financial Planning, 03 August 2011 01 Dec. 2011http//ourbusinessnews.com/impact-of-a-weak-dollar3. Edward W. Younkins, HOW GOVERNMENT MANIPULATES MONEY AND PRODUCES INFLATION, 28 Oct. 2000 02 Dec. 2011http//www.quebecoislibre.org/001028-11.htm4. Walter E. Williams, Syndicated Columnist, The governments role in inflation, 06 Sep. 2009 02 Dec. 2011http//www.journal-news.net/page/content.detail/id/524850/The -government-s-role-in-inflation.html5. Hall, E. T. (1976). Beyond culture. New York Dubleday dell Publishing. 17 October. 2011