SINGAPORE ECONOMY

Less than 5% of Singapore's land is used for agriculture. Tropical fruits, orchids, and vegetables are intensively cultivated; rubber and copra are produced; and poultry, hogs, and tropical fish are raised. There are no exploitable natural resources in the country. Its power is produced by thermoelectric plants, and water is supplied by a number of reservoirs. Singapore has a fine rapid transit system, good roads, a railroad that crosses the island, and a causeway carrying road and rail traffic to the mainland. Singapore's workforce is employed primarily in manufacturing, in the service industries, and in commerce, with a negligible proportion engaged in agriculture. The country has become a major center of international finance in recent decades. The economy slowed as a result of the Asian financial crisis of 199798 and the 2001 recession, but unemployment and inflation remained low. The increasing importance of China in manufacturing and finance, however, is seen as a threat to Singapore's future economic growth, and the nation has sought to develop its tourism industry (including casino gambling). Singapore is one of the world's greatest commercial centers, with a large, modern port. Commerce has historically been the chief source of income. For many years the largest importer in Southeast Asia, Singapore is a free port and an entrept that reexports more than half of what it imports, notably rubber, petroleum, textiles, timber, and tin. It also exports locally manufactured goods such as computers and telecommunications equipment, petroleum products, oil drilling equipment, plastics, rubber products, and processed food and beverages. The country imports most of its food. Singapore's chief trading partners are Malaysia, the United States, China, Japan, and Indonesia. With more than 300 factories and deepwater wharves, the Jurong Industrial Estate is Southeast Asia's largest industrial complex. It and the Changi International Airport are built largely on infill of marsh and shallow waters of the straits. The country has a number of large petroleum storage and refining facilities, and Keppel Harbor is one of the world's largest container-handling facilities. Development of the former British naval base at Sembawang on the Johore Strait as a commercial shipyard helped to enhance Singapore's status as a major center for shipbuilding and repairs. .UNEMPLOYMENT An economic condition marked by the fact that individuals actively seeking jobs remain un hired. Unemployment is expressed as a percentage of the total available work force. The level of unemployment varies with economic conditions and other circumstance

UNEMPLOYMENT IN SINGAPORE

Unemployment Rate in Singapore decreased to 1.90 percent in the third quarter of 2012 from 2 percent in the second quarter of 2012. Unemployment Rate in Singapore is reported by the Ministry of Manpower, Singapore. Historically, from 1986 until 2012, Singapore Unemployment Rate averaged 2.5 Percent reaching an all time high of 6.0 Percent in March of 1986 and a record low of 1.4 Percent in June of 1990. In Singapore, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. This page includes a chart with historical data for Singapore Unemployment Rate. However during the early 1990s, .the Singapore government foresaw a possible labour shortage problem in the future. Despite having one of the best mortality rates in the world, Singapores birth rate of 8.5 births/1,000 population meant that its population replacement rate was among the lowest in the world. Singapore also has one of the lowest annual population growth rates in the world at 0.817 percent. As a result, the Singapore government began to actively pursue foreign immigrants and expatriates to live and work in the country. Today, foreign workers comprise of 35.8 percent of the labour force. The vast majority of foreign workers are cheap labour from developing Asian countries who occupy jobs that regular Singaporeans. shun. A significant, but smaller, percentage of foreign workers are high value talent who are brought in to provide strong labour competition for Singaporeans.

Monetary Policy
The MAS was set up in 1971 to oversee various monetary functions associated with banking as well as finance. Before its establishment, monetary functions were performed by government departments and agencies. As Singapore progressed, the demands of an increasingly complex banking and monetary environment necessitated streamlining the functions to facilitate the development of a more dynamic and coherent policy on monetary matters. Therefore in 1970, the Parliament of Singapore passed the Monetary Authority of Singapore Act leading to the formation of MAS on 1 January 1971. The act gives MAS the authority to regulate all elements of monetary, banking and financial aspects of Singapore. In April 1977, the Government decided to bring the regulation of the insurance industry under the wing of the MAS and in September 1984 the regulatory functions under the Securities Industry Act (1973) were also transferred to MAS. This means that unlike many other central banks, MAS is also the financial regulatory authority for Singapore. The MAS has been given powers to act as a banker to and financial agent of the Government. It has also been entrusted to promote monetary stability, and credit and exchange policies conducive to the growth of the economy .However, unlike many other central banks such as Federal Reserve System or Bank of England, MAS does not regulate the monetary system via interest rates to influence the liquidity in the system. Instead, it chooses to do it via the foreign exchange mechanism. It does so by intervening in the SGD market.

Monetary Authority of Singapore (MAS) is the central bank of Singapore. It formulates and executes Singapore's monetary policy, and issues Singapore currency. As banker and financial agent to the Government, MAS manages the country's official foreign reserves and issues government securities. As supervisor and regulator of Singapore's financial services sector, MAS has prudential oversight over the banking, securities, futures and insurance industries. It is also responsible for the development and promotion of Singapore as an international financial centre. MASMission To promote sustained non-inflationary economic growth, and a sound and progressive financial centre. MAS' Objectives

To conduct monetary policy and issue currency, and to manage the official foreign reserves and the issuance of government securities; To supervise the banking, insurance, securities and futures industries, and develop strategies in partnership with the private sector to promote Singapore as an international financial centre; and To build a cohesive and integrated organisation of excellence.

Monographs
The MAS manages the Singapore dollar (S$) exchange rate against a trade-weighted basket of currencies of Singapore's major trading partners and competitors. The composition of this basket is reviewed and revised periodically to take into account changes in Singapore's trade patterns. This trade-weighted exchange rate is maintained broadly within an undisclosed target band, and is allowed to appreciate or depreciate depending on factors such as the level of world inflation and domestic price pressures. MAS may also intervene in the foreign exchange market to prevent excessive fluctuations in the S$ exchange rate. Monetary policy is reviewed on a semi-annual basis to ensure that it is consistent with economic fundamentals and market conditions, thereby ensuring low inflation for sustained economic growth over the medium term. The MAS publishes a semi-annual Monetary Policy Statement (MPS) in April and October which explains its assessment of Singapore's economic and inflationary conditions and outlook, and sets out its monetary policy stance for the following six

months. Singapore's exchange rate-based monetary policy system and its experience since its adoption are reviewed in MAS' monograph on Singapore's Exchange Rate Policy. In the context of Singapore's open capital account, the choice of the exchange rate as the focus of monetary policy would necessarily imply that domestic interest rates and money supply are endogenous. As such, MAS' money market operations are conducted mainly to ensure that sufficient liquidity is present in the banking system to meet banks' demand for reserve and settlement balances. The key aspects of MAS' monetary policy operations, viz. foreign exchange and money market operations, and the various factors and considerations underlying them, are discussed in MAS' monograph on Monetary Policy Operations in Singapore

Fiscal Policy
Before 1986, Singapore's corporate income tax rate and top marginal personal income tax rate both stood at 40%. Such high rates were deemed to be uncompetitive. On the recommendation of the 1986 Economic Committee, Singapore's government decided that it needed to shift from direct to indirect taxes, in order to maintain its international competitiveness in attracting investments, and to sustain its economic growth in order to create well-paying jobs for Singaporeans The GST was part of a larger tax restructuring exercise to enable Singapore to shift its reliance from direct taxes to indirect taxes. The government argued that tax reform was necessary in order to maintain Singapore's competitiveness, in order to sustain long-term growth and job creation. The government also argued that with an ageing population, Singapores income tax base was expected to decline. With a broad-based GST, the taxation burden would be more evenly spread among the population A value-added tax, like the GST, also has several features that make it attractive. A tax on consumption, not income, the tax system inherently encourages savings and investments instead of consumption. The tax also has a self-policing mechanism that discourages evasion, unlike a retail sales tax system or an income tax system, which would be relatively easier to evade The main focus of the Government's expenditure is on the delivery of essential public goods and services to Singaporean. The Government spends to assure the nation of a secure future. Therefore, key areas of expenditure are on education, public housing, health care and national

security. The Government is also committed to building and maintaining world-class economic infrastructure and services. This is evidenced by the fact that development expenditure accounted for around one-third of government expenditure on average over the last three decades. Singapore's tax policies, although providing the main source of funding for the government, seek to enhance its economic competitiveness and attract foreign investments to Singapore. This combination of fair tax policies and prudent expenditure programmes are key reasons for Singapores successful fiscal policy over the years, which complemented the monetary policy in promoting sustained and non-inflationary economic growth. As Singapores fiscal policy is directed primarily at promoting long-term economic growth, rather than cyclical adjustment or distributing income, the Singapore Government has adopted the following principles in its conduct to meet its objective: the private sector is the engine of growth, and the government's role is to provide a stable and conducive environment for the private sector to thrive; tax and expenditure policies should be justified on microeconomic grounds and focus on supplyside issues, i.e. incentives for saving, investment and enterprise; the counter-cyclical role of fiscal policy is limited, due to high import leakages. Against the backdrop of such a prudent fiscal policy, Singapore was able to enjoy consistent budget surpluses over the years, which contributed to a high savings rate that allows it to achieve one of the highest investment rates in the world without having to incur foreign debt. High domestic savings have further, in turn, provided Singapore a high level of foreign reserves, which has served to boost investor confidence and provide a buffer against adverse economic shocks. With this ethos of fiscal rectitude, which extends throughout the public sector, the MAS has been able to focus on its primary goal of ensuring price stability and preserving confidence in the domestic currency through the appropriate management of the S$ exchange rate, without needing to balance this against the requirements of deficit financing.

National income
National Income is the net product of or net return on the economic activity of individuals, business firms and the social and political institutions that form a nation. Since product or income can be measured in several stages, there are several methods of measuring national income. At the beginning in the Production Cycle, National Income can be taken as the cumulative value of the various factors of production i.e. labour, capital and enterprise. The national income at this

stage is the value of the total product of each industry after deducting the value of materials, semi fabricates, durable capital and services of other industries used in the production process. At the level of Distribution of Money, National Income is the cumulative value of income receipts of individuals (wages, salaries, dividends) and undistributed net profits of manufacturing units. Lastly at the level of National Product, it is the cumulative value of the flow of goods to consumers, savings of consumers and allocation of undistributed profits of manufacturing units. The National Income of Singapore is illustrated for a period from 1998 to 2008 in the following table.

Gross 1998 2003 2004 2005 2006 2007 2008 National Income(GNI) GNI at 141,872.9 158,453.6 174,436.6 191,912.4 213,246.2 234,246.2 250,387.9 Market Prices Gross Domestic 137,902.4 162,382.1 185,364.5 201,313.3 221,142.8 251,610.1 257,418.5 Product At Market Prices Net Income From Abroad 3970.5 -3928.5 -10927.9 -9400.9 -7959.7 -17363.9 -7030.6

SINGAPORE GDP The Gross Domestic Product (GDP) in Singapore was worth 239.70 billion US dollars in 2011. The GDP value of Singapore represents 0.39 percent of the world economy. GDP in Singapore is reported by the The World Bank Group. Historically, from 1960 until 2011, Singapore GDP averaged 51.8 USD Billion reaching an all time high of 239.7 USD Billion in December of 2011 and a record low of 0.7 USD Billion in December of 1960. The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. This page includes a chart with historical data for Singapore GDP.

Measuring the National Income

There are three methods in measuring national income. They are the income approach, output approach and expenditure approach. Singapore reports her national output using all three methods. Whichever method used, the computed national income figures for a country for a specified period should be equal. However, in most cases, different national income figures are usually derived using different approaches. The difference is known in the literature as statistical discrepancy. The statistical discrepancy in Singapore has since reduced in size. For instance in 1986, it accounted for 1.9 percent of the GNP ($729.5 million) while in the last three years, the ratio has fallen to 0.009 percent in 1994, 0.0006 percent in 1995 and 0.0007 percent in 1996. The size of the discrepancy can provide us with information on the relatively efficiency of the methods of collecting data. Also, statistical discrepancy can be used to measure the magnitude of a countrys hidden economy. Various definitions of hidden economy exist in the literature. Generally, the hidden economy is that part of the GDP which is under-reported and/or unreported in official statistics. The size of the hidden economy can be measured via the statistical discrepancy derived from national income and national expenditure. They are obtained using the income and expenditure approaches respectively. The idea is intuitively simple of understand. Unreported and/or underreported income earned will show up as expenditure, usually in the form of cash. For instance, a person may have earned $150 but reported only $100 in his income (which will be included in the national income accounting under the income approach). This means that $50 is not reported. His/her spending should amount to $150. The excess $50 shown in the expenditure accounts, and not in the income accounts is equal to the size of the hidden economy. What about those countries which do not generate national income statistics based on the income approach? Can they measure the hidden economy using statistical discrepancy derived from national output and national expenditure statistics? The answer is yes although unreported income is not shown in the discrepancy figures. Income earned by the individuals is not known. However, the discrepancies derived from national output and national expenditure can be used to measure the hidden economy. More

specifically, they measure unreported and /or underreported goods and services produced in the country via the productive sectors. Recall that by definition, the national income figures measured using the three approaches should yield the same results that is national income calculated using the following expression: Output Approach (T) = Income Approach (I) = Expenditure Approach (E) Since E I = H, where H is the size of the hidden economy, and T = I, then E=T+H H=E-T Goods and services that are produced in productive sectors, which crosses the production boundary but are not reported to the tax authority, will show up as expenditure in the expenditure accounts.

Singapores Export, Import & Trade

International trade is highly important for Singapore, as it has virtually no natural resources. A large percentage of trade is conducted to meet domestic demand for energy, food, and other necessities. Singapore also regularly engages in entrept trade, whereby industries and businesses in the country import raw materials, before refining them for re-export. 47 percent of Singapores exports consist of re-exports. Singapore is the 14th largest exporter and the 15th largest importer in the world. According to the WTO, Singapore has the highest trade to GDP ratio in the world at 407.9 percent. As a strong advocate of free trade, Singapore has relatively few trade barriers. Trade partners with Most Favoured Nation (MFN) have zero tariff rates applied to their products apart from six lines for alcoholic beverages. There are however some import restrictions based mainly on environmental, health, and public security concerns. The import of rice also requires import licensing in order to ensure food security and price stability. In 2010, Singapores exports were valued at US$351.2 billion. The primary export partners include Hong Kong (11.6 percent of total exports), Malaysia (11.5 percent), US (11.2 percent), Indonesia (9.7 percent), China (9.7 percent), Japan (4.6 percent). Singapores imports were valued at US$310.4 billion. The US was Singapores primary source of imports (14.7 percent of

total imports) followed by Malaysia (11.6 percent), China (10.5 percent), Japan (7.6 percent), Indonesia (5.8 percent), South Korea (5.7 percent). Remarkably, despite not having a single drop of proven oil reserves in the country, Singapore is the 18th largest exporter of oil in the world. In 2010, Singapore exported 1.374 million barrels of oil/day.

Singapores Industry Sectors

The petroleum and petrochemicals industry in Singapore is one of the biggest in the world. Singapore imports oil from other countries before refining them for further use to other countries. Singapore has the third largest oil refinery in the world, behind Rotterdam and Houston. The Singapore Petroleum Company (SPC) is also a leading player in the petroleum industry and is engaged in exploration, production, refining and distribution. Manufacturing is another major industry in Singapore. Although Singapore has specialized in digital and electronics manufacturing for the past forty years, the country has diversified into other forms of manufacturing. Thanks to government initiatives and subsidies, biomedical and pharmaceutical manufacturing are seen to be the future for Singapore industries. Singapore is also a global leader in services, particularly in finance. Singapores banking system is considered to be among the strongest in the world. Singapore has the fourth largest foreign exchange market in the world after London, New York and Tokyo. The Singapore Government Securities is the only Asian market, besides Japan, to be part of the Citigroup World Bond Index. The Singapore Exchange (SGX) was also the first demutualised, integrated securities and derivatives exchange in Asia-Pacific. Singapore is recognised as one of the premier asset management centres in Asia with more than 200 international asset management firms. Finally the Asian Dollar Market in Singapore has become an influential element to the economic development of the whole of Asia with assets of more than US$582 billion recording in 2004. Apart from finance, tourism is the other major service industry available in Singapore. In 2010, tourist arrivals to Singapore hit a record high of 11.638 million visitors with tourist receipts of more than S$18.8 billion. Thanks to government initiatives, tourism has diversified into niche markets such as medical tourism, the gaming industry and the MICE (Meetings, Incentives, Conferencing and Exhibitions) industry. With the advent of the two new integrated resorts in 2010, tourism expenditure in sightseeing and entertainment grew by an astonishing 1,834 percent in 2010. Services (72.8 percent) and Industry (27.2) made up the bulk of Singapores GDP in 2010. Agricultures contribution was virtually irrelevant statistically it accounted for zero percent of

the GDP. After two years of negative industrial production growth due to the global financial crisis, Singapores industrial production growth rate for 2010 was the third highest in the world at 25 percent behind Qatar and Taiwan.

Price stability
The Monetary Authority of Singapore, the city states central bank, faces the challenge of maintaining price stability amid a more volatile global environment, Prime Minister Lee HsienLoong said. Because of the economic and political uncertainties in the EU and U.S., and the worries over global deleveraging and rebalancing, financial markets and capital flows will continue to be volatile, and asset price inflation will remain a risk ,Lee said in a speech in Singapore today. Energy and commodities prices continue to fluctuate around elevated levels. MAS must address these issues to keep prices stable and maintain preconditions for economic growth. Singapores central bank, which uses the islands dollar to manage prices, said last month it will slow gains in its currency, joining other Asian policy makers in trying to juggle inflation pressures with protecting growth amid a faltering global recovery. The city state has remained vulnerable to fluctuations in overseas demand for manufactured goods even as the government boosts the financial services and tourism industries to cut reliance on exports. Safeguarding Reserves Singapores reserves have climbed to more than $200 billion now from $1.4 billion in 1971, Lee said today. Safeguarding the real value of our official foreign reserves in a more challenging and risky investment climate is an issue the central bank must contend with, Lee said. In an environment of lower returns and higher risk, it is all the more important for MAS to preserve the real value of our official foreign reserves, to maintain confidence and deter speculation in the Singapore dollar

The central bank had tightened monetary conditions at each of its previous three semi-annual reviews before the October decision. The Monetary Authority of Singapore guides the local dollar against a basket of currencies within an undisclosed band. It adjusts the pace of appreciation or depreciation by changing the slope, width and center of the band. The monetary policy stance remains appropriate, Ong Chong Tee, a deputy managing director at the central bank, told reporters last week. Inflation is forecast by the monetary authority to average about 5 percent this year and 2.5 percent to 3.5 percent in 2012

Singapore's Economic Outlook for 2015

Singapores Economic Forecast
Singapore is the 40th largest economy in the world according to both GDP (current prices, US dollars) and GDP (PPP). In 2010, Singapores GDP (current prices, US dollars) was US$222.699 billion and its GDP (PPP) was US$291.937 billion. Singapores GDP (PPP) grew by 15.56 percent from 2009 to 2010. This reflected the strong overall economic recovery from the 2008 global financial crisis where GDP (PPP) had only increased by 3.70 percent in 2008 and 0.14 percent in 2009. Prior to the financial crisis, the average GDP (PPP) growth rate from 2003 to 2007 was 11.268 percent. From 2011 to 2016, Singapores GDP (PPP) growth will fall between 5.75 to 6.42 percent. By the end of 2016, Singapores GDP (PPP) is expected to reach US$413.46 billion. Singapore also has the third highest GDP (PPP) per capita in the world. In 2010, Singapores GDP (PPP) per capita was US$56,521.73 behind Qatar and Luxembourg. With the Singaporean government recently revaluing its currency upwards by 1.3 percent in order to contain imported inflation, Singaporeans are expected to be wealthier with its GDP (PPP) per capita increasing by 4.60 percent in 2011. From 2012 to 2016, Singapores GDP (PPP) per capita is expected to rise by 3.94 to 4.14 percent annually and reach US$72,178.82 by the end of 2016. Although Singaporeans do generally enjoy fairly low inflation rates, higher costs in transport, housing and food have caused inflation rates to rise significantly between 2007 and 2010. From 2002 to 2006, Singapores average inflation rate (average consumer price change) was 0.6428

percent. However, 2007 to 2010 saw an average inflation rate (average consumer price change) of 3.03 percent, peaking at 6.612 percent in 2008. In 2011, inflation (average consumer price change) in Singapore is expected to be hit 3.3 percent. The next five years should see inflation rates gradually decrease and reach 1.976 percent by 2016. .