Analysis of Singapore’s GDP and Inflation figures Essay

According to the above omen of gross domestic product proceeds of capital of capital of capital of Singapore, we know 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 occupation of all final goods and labor value from the economy of a country or region, it is often recognized as the best index to measure national economic conditions. It not only reflects a countrys economic performance, but excessively reflects a countrys national strength and wealth.The importance of GDP bear not be ignored, especially when it is mentioned in the same breath with market expectations, the actual economic growth respect or recession rate often affects the trend of financial markets. The higher the entropy shows that the to a greater extent driving economic growth.GDP represents all the economic activity within the country, reflects the basic sit uation for economic growth, it is apply to analyze cur aim lieu of the states economic development. GDP growth decelerated, indicating that the economy is in contraction phase, consumer demand of the production will decrease. In widely distributed, the higher GDP of Singapore means the better economic development, rising interest rate, its currency exchange rate is strong.There are so many different 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 decrease 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 much than half of its GDP, which makes the economy vulnerable to changes in global economic growth. Moreover, recent GDP data revisions in the US showed that economic conditions were not as bu irdly as previously thought indeed, aggregate activity had stallight-emitting diode since 2010.Un plasteredty of U.S. economic recovery and the relative recession in the global electronics market has also led to further downturn in Singapores export demand. As reduction of global demand, as the pillar industry 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 decline in growth rate and the global electronics industry 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, collect to supply-chain disruptions from the Japan earthquake and weaker demand from the advanced economies(MAS, 2011). Economic growth was weak in the 2011, reflecting the impac t of transitory shocks such as higher oil prices and the Nipponese earthquake.A strong dollar will stimulate GDP by discouraging exports and encouraging imports, says Bob McTeer, former president of the Federal Reserve brim 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 amplification, 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 agree with the statement without a doubt. The main aim of the government is to reduce high inflation to keep balance.Inflation, a monetary phenomenon, is an increase in money and credit. Its major consequence is raising prices. Inflation occurs when the economys aggregate vol ume of money expenditures grows at a faster rate than its total 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 prescribed 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 costs of factors of production (wages, rent interest, cost of raw materials, increased normal profit requirement) push up the general level of prices. This applies to the aggregate supply side of the economy and arises partly because general wage costs arise, for example the powerful trade unions might have pushed up wages without increasing the productivity.Import prices play a role as well, because nowadays no country is indepen dent 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 rates also cause inflation. As the production costs of the soused 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 as yet 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 appropriate monetary policy or fiscal policy to reduce high inflation based on different types of inflation. The government has several ways to control inflation. It can do this by using fiscal policy that manages the aggregate demand by using governm ent spending and monetary policy to reduce investment, outlay and the circulation of the currency.Fiscal policy government should raise tax rate and reduce expenditure, for example, raising expenditure 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 overall price fall, playing an alleviative role to high inflation.Main weapon 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 financial 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 uncertainty and discoura ges savings. It is also damaging for the balance of payment, because it makes imports cheaper. It distributes incomes in favour of profit earning, away from fixed earning pensioners, whose real income will fall. Therefore, government must play active role in managing high inflation rate by an economy all the time.References1. The Monetary Authority of Singapore, Recent Economic Developments in Singapore, 01 Sep 2011, pp 01 01 Dec. 20112. Bob McTeer, Impact of a Weak Dollar by Admin, Posted 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/ summon/content.detail/id/524850/The-government-s-role-in-inflation.html5. Hall, E. T. (1976). Beyond culture. New York Dubl eday Dell Publishing. 17 October. 2011