Singapore Economic Growth Essay
Singapore has an exceedingly advanced market economy focusing on trade. Singapore’s economy is known to be the 7th least corrupt, most pro-investment and the third largest Gross Domestic Product per capita (Purchasing Power Parity) in the world. The Singaporean economy is an important Foreign Direct Investment outflow sponsor in the world. Singapore also benefits from the inflow of FDI from international investors and institutions due to its extremely striking investment atmosphere and a steady political situation. The economy generates most of its revenue through exports of electronics, chemicals and services. Its position as the heart of economic wealth in Asia permits it to procure natural resources and raw materials which it is deficient in.
After its independence from Malaysia in 1965, Singapore had an undersized local market with soaring levels of unemployment and poverty. The living conditions were very bad and unemployment averaged 14 percent. The GDP per capita was US$516, and half of the people were uneducated. To counter this problem, the Singaporean government established the Economic Development Board to stimulate investment, both local and foreign, in the economy. As a result, Singapore’s capital accumulation increased 33 times by 1992. Living standards gradually rose, with more people moving from low-income groups to middle-income groups. This led to elevated savings rate and a very sustainable economy growth in the long run.
Singapore’s economic policy created real growth of around 8 percent from 1960 to 1999. The economy flourished even more in 1999 after the regional financial crisis, with a growth rate of 5.4 percent and later 9.9 percent in 2000. However, the economic slump in the United States, Japan and the European Union coupled with the global decline on electronics reduced Singapore’s forecasted economic growth to negative 2 percent in 2001. The economy bounced back and grew by 2.2 percent the next year and by another 1.1 percent in 2003 due to the spread of severe acute respiratory syndrome. Consequently, a significant comeback led to the Singaporean economy increase its economic growth rate by 8.3 percent in 2004. In 2005, economic growth was 6.4 percent and in 2006, it was 7.9 percent.
From 8 June 2013, Singapore’s unemployment rate has fallen down to as low as 1.9 percent and the country’s economy has a comparatively lower growth rate, of approximately 1.8 percent on a quarter to quarter basis. This is far lower to economic growth that took place in 2010 with averaged 14.8 percent. The GDP in Singapore expanded and reached 6.2 percent on quarter in the most recent three months of 2015. This was higher than a 5.7 percent increase recorded earlier in 2015. The tertiary sector flourished more than estimated while manufacturing contracted more than predicted as shown by the annual figures. Over the course of the years, Singapore’s GDP growth rate averaged 6.96 percent from 1975 till 2015, reaching its highest at 37.20 percent in the first four months of 2010 and hit its lowest at -13.50 percent in the fourth quarter of 2008.