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The GDP in 2017 current market prices is 447,284 million.
Real GDP growth in 2017 is 3.6%

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GDP is the market value of all final goods and services produced in the economy during a calendar year.

It only measures the output that is produced in the country itself and it does not include output produced outside of the country, second-hand transactions and non-productive transactions.

It is calculated using two approach. The income approach or the expenditure approach.

For the income approach:
Compensation of employees + Rental income + Profits + Net interest + Indirect business taxes + Depreciation

For the expenditure approach:
Personal consumption expenditure + Investments + Government expenditures on goods and services + Net exports

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Singapore's economy growth has slowed down to 2.6% in the third quarter of 2018.

Singapore was expected to grow for another 2.5 per cent to 3.5 per cent growth this year.

Due to a full-fledged trade war between the United States and China could hit Singapore badly and may cause Singapore's GDP growth to decrease or stalled.

This is because Singapore depends heavily on international trades and has most of its products imported/exported from the US and China to Singapore. Singapore has about 0.1% of its total domestic exports to the world. In addition, bilateral trade between US and China indirectly contributes to 1.1% of Singapore's GDP. This means that it could cause a significant difference in Singapore's Real GDP for the upcoming years if we are affected by the trade war.

Having a trade war will affect Singapore's supply-chain, leading to a slowdown in economic trade if it spills over business sentiments and other factors of growth. It also triggers a sharp and sustained fall in global business and consumer confidence, or a tightening of global liquidity conditions, the macro-environment will fundamentally change.

Under the expenditure approach, the net exports component will be affected if the trade war happens. The net exports amount will decrease which will lead to a decrease  the Real GDP since Singapore has most of its exports from these countries.

The trade war can potentially cause the business sentiments will decrease as the factor of production is affected. When production is affected, there will be lesser goods produced and purchased. Real GDP will decline as there are lesser resources available for consumption.

Appreciation of Singapore dollar will also be affected to decrease since production is slowed down. At the same time, the economy is also slowing down and may be trending towards a recession in the business cycle instead of reaching its peak. This will cause Singapore overall Real GDP to decrease as compared from previous years.

In year 2018

The country's gross domestic product (GDP) grew by 4.6 per cent year on year in the first quarter, and 4.1 per cent in the second.

The biggest contributor, the services industries of GDP only grew by 2.9 per cent, matching growth in the last quarter.

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Singapore's economy grew by 2.6 per cent in the third quarter - slowing down considerably after a strong showing in the first half of the year, according to flash estimates released yesterday by the Ministry of Trade and Industry (MTI).

The manufacturing sector, which has been the main engine of recent growth, also finally appeared to lose steam.

While the fundamentals seemed in good shape, and the figure was within MTI's forecast range of 2.5 per cent to 3.5 per cent growth for 2018, there are concerns that a full-fledged trade war between the United States and China could hit Singapore badly.

The country's gross domestic product (GDP) grew by 4.6 per cent year on year in the first quarter, and 4.1 per cent in the second, before the latest slowdown hit.

Manufacturing, which makes up a fifth of the economy, grew 4.5 per cent year on year in the third quarter, well short of the double-digit growth in the first half of the year.

Some economists now predict that the slowdown in the manufacturing industry is likely to continue for some time.

"Singapore's manufacturers, particularly those in the semiconductor segment, are already experiencing slowing growth due to the maturing of the global electronics cycle, and business sentiment is likely to be further dampened by rising trade tensions," said a report by Fitch Solutions Macro Research.

Things will not get any easier, with the Singdollar likely to ap-preciate after the Monetary Authority of Singapore announced yesterday that it would tighten its monetary policy.

The stronger currency, while controlling imported inflation, could hit Singapore's exports if they become more expensive for its trading partners, said SIM Global Education senior lecturer Tan Khay Boon.

Meanwhile, an even bigger concern looms. "With the trade dispute between the US and China not likely to abate in the next few months, the manufacturing sector's performance is likely to encounter more downward pressure," said Dr Tan.

However, some economists said the impact of the US-China trade tensions may be felt only later, depending on when they fully erupt.

OCBC Bank, for example, stuck to its 2019 growth forecast of 2.7 per cent, but with a caveat that it could hit a lower range of 2.2 per cent if the US were to escalate the trade war by imposing tariffs on all US$505 billion (S$695.6 billion) worth of Chinese goods it imports.

Meanwhile, some hope that other industries will step up to become growth drivers.

The service industries - the biggest contributor to GDP - grew by 2.9 per cent, matching growth in the last quarter.

"A strong showing in the service cluster will be useful in supporting growth amid the normalisation in the manufacturing cycle," said DBS senior economist Irvin Seah.

The construction sector shrank by 3.1 per cent year on year in the latest estimates, though this was an improvement on the 4.2 per cent decline seen in the second quarter.

Some, like Mr Seah and CIMB Private Bank economist Song Seng Wun, said the 1.7 per cent quarter-on-quarter growth of the construction industry shows the worst is over for it. Others disagree, pointing to the likely effect of recent property cooling measures on construction demand.

While the latest GDP growth figures showed a drop, some had expected even bleaker numbers, and three commercial banks - DBS, OCBC and United Overseas Bank - marginally raised their 2018 forecasts to between 3.3 per cent and 3.4 per cent, showing they are positive on the economy, at least for this year.
SEE TOP OF THE NEWS

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Singapore growth slows to 2.6% in third quarter

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Singapore's economy grew by 2.6 per cent in the third quarter - slowing down considerably after a strong showing in the first half of the year, according to flash estimates released yesterday by the Ministry of Trade and Industry (MTI).. Read more at straitstimes.com.

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The cause of the drop in the figures below may be due to various reasons such as causes like unemployment and inflation whereby consumers are purchasing lesser goods than before because they have lost their purchasing power.

Another possible cause will be because of the use of nominal GDP instead of the real GDP. Nominal GDP includes the change in prices of goods and services (decrease) which have caused the nominal GDP to fall leading to lower GDP in the economy.

Next, the base year might have been selected wrongly which have caused the inaccurate calculation of the actual GDP the economy may have.

Lastly, Singapore may be experiencing any negative economic growth in the net exports which may have led to the reason why its GDP is decreasing. It may be because the economy is entering into a  recession.

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Based on the figures estimation shown in the picture below, it is predicted that the GDP will continue to decrease as the years goes by.

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It tells us the proportion of the labour force who have not found jobs yet, even though they are able and willing to work and are actively looking for jobs.
It is the non-availability of jobs for people who are able and willing to work at the prevailing wage rate

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Unemployment rate in the labour market rose slightly from 2% in March to 2.1% in June 2018.
The increase in unemployment rate is due to "more people entered the labour force to look for work on the back of continued expansion in economic activities" the ministry added.
"Business restructuring and reorganisation remained the top reason for retrenchment" MOM said.
Some reasons why business restructure and reorganise are to better make use of their talent, improve competitive advantage and to incorporate new technology.
When the business is restructing, it is structural unemployment. Structural unemployment is caused by the mismatch of skills of workers out of the work and the skills required for existing job opportunities.
Relocation of business operations: With the increase competition and globalization , firms will try to cut production cost by relocating their manufacturing operations to low-cost countries such as China and India. This would then cause jobs in Singapore to be lost in the process.
Due to the drop in real GDP, Singapore's economy growth slowed down to 2.6% in the third quarter of 2018. There might have Cyclical Unemployment. Cyclical unemployment is caused by the lack of jobs during a recession. When real GDP falls, some companies close down, many jobs will be gone and the unemployed scramble for fewer available jobs.

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Higher unemployment rate, more retrenchments in Q2: MOM

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SINGAPORE: Singapore's labour market saw higher unemployment and more retrenchments in the second quarter of 2018, although there was also employment growth and more job vacancies available, according to Ministry of Manpower (MOM) figures released on Thursday (Sep 13).

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1) Cyclical Unemployment: lack of jobs during a recession
2)  Structural Unemployment: mismatch of skills of workers and skills required for job
3)  Frictional Unemployment: the search time required by workers with skills who are changing jobs
4) Seasonal Unemployment: type of working arrangement in which a person is employed routinely for part of the year, spends remaining of the months/weeks without job or hunting for another job

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1) Personal Cost:  Loss of income, loss of self-esteem and possibly high anxiety & depression
2) Social Cost: Rising crime rates, increased divorce rates & political unrest
3) Other costs to economy: Loss of output, labour resources left idle, decline in consumption, investment & consumer confidence

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- Understated due to discouraged workers, part-time unemployment or underemployment
- Overstated due to workers engaged in illegal work or workers who could work but choose not to to qualify for unemployment benefits.

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The government can help with  the increased unemployment rate 

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The government can help with  the increased unemployment rate 

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- Introduce unemployment benefits
- Give employment incentives
- Improve employability

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Keynesian theory:
governments help the population weather the downturn by intervening in the economy

Classical theory:
Classical theory states that if governments were to leave the markets to its own, the markets will readjust itself and find a point of equilibrium

Which theory does Singapore adapt more to?
Singapore adapts more to the Keynesian theory. This is because Singapore has weathered a few recessions since independence. For example the 1998 Asian Financial Crisis, 2003 SARS outbreak and the 2010 US financial mortgage crisis. The government has intervened by implementing expansionary fiscal policies such as the Jobs Credit Scheme and the skills Programme for upgrading and resilience package during the 2010 recession to encourage firms to send redundant workers to training instead of firing them. The government also intervened in the economy by dishing out fiscal incentives to attract headquarters, finance and treasury, and other business activities of large multinational companies.

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- As one of the articles have mentioned about Singapore having a higher unemployment rate and higher retrenchments in the second quarter of 2018, this means that the expectation factor will affect the consumption line
- People may expect themselves to become retrenched or unemployed, so they will save more, which will cause the consumption to go down

- The article on Singapore's core inflation mentioned about Singapore's core consumer price index (CPI) eased to 1.8 per cent in September from 1.9 per cent the previous month, according to the latest data
- There is a slower pace of increase in the prices of clothing and footwear, as well as a steeper fall in the prices of recreation and entertainment goods as well as telecommunication equipment
- This means that the price level of the goods will be lower as the salary they receive is still the same as usual, but the cost of the goods have dropped and they can buy more
- It is also mentioned that imported inflation is likely to increase on account of higher global oil and food prices
- This can also mean that the expectation of future inflation rate may cause consumers to stock up on basic necessities such as food, water and household items. Car drivers may also drive their cars less often and turn to public transportation for cheaper alternatives, which may also cause the price of public transportation to increase
- Expecting the future inflation rate on food prices to increase will also cause people to save more money and spend lesser will cause the consumption line to drop
- The price level will also be very different if inflation were to kick in. For example, the purchasing power of $5 for food may increase to $7, and people may spend even lesser on food, which will cause the consumption to decrease even further

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Other Factors That Will Shift the Consumption Line

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Other Factors That Will Shift the Consumption Line

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1. Expectations
- Expectations may involve the future inflation rate, the likelihood of becoming unemployed, the likelihood of receiving higher income, anticipation of a recession, etc
2. Wealth
- Change in the value of real and financial assets
3. Price levels
- Change in purchasing power
4. Interest rates
- Change in the cost of borrowing

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1. Dependent of the level of real disposable income
2. Amount of consumption when real disposable income is zero
3. Spent on the basic necessities of life
4. Households will dissave to spend on autonomous consumption

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Saving
Money earned but not spent
Dissaving
The amount by which personal spending exceeds disposable income
How do people dissave?
By drawing down previously accumulated financial assets like savings accounts, stocks, and bonds, or by borrowing

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- There is a direct relationship between changes in real disposable income and changes in consumption

- A change in taxes which causes a change in real disposable income will result in a movement along the consumption function

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What is Investments and what determines the level of investments?

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What is Investments and what determines the level of investments?

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Investment spending is on newly produced non-residential structures such as factories, equipment, changes in inventories and residential structures.
- According to classical economists, the interest rate determines the level of investment while for Keynes, it is the expectation of future profits.

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Why is the Investment Demand unstable and how does it affect investments?

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Why is the Investment Demand unstable and how does it affect investments?

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Due to
1) Expectations
2)Technological change
3) Capacity Utilization
4) Business Taxes

Effect of expectations:
- Businesspersons are quite susceptible to moods of optimism and pessimism about future economic conditions.

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The core inflation rate drops to 1.8% in September as compared to 1.9% in August.

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(Updated: )

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SINGAPORE: Singapore's core consumer price index (CPI) eased to 1.8 per cent year-on-year in September from 1.9 per cent the previous month, according to the latest data.

A moderation in retail inflation had offset higher services inflation, the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a press release.

The core inflation measure excludes changes in the price of cars and accommodation.

Headline inflation came in at 0.7 per cent, unchanged from August, as a smaller decline in accommodation costs and higher services inflation was offset by lower retail inflation.

The overall cost of retail items rose by 1.5 per cent in September, moderating from the 2.0 per cent increase in August. This mostly reflected a slower pace of increase in the prices of clothing and footwear, as well as a steeper fall in the prices of recreation and entertainment goods as well as telecommunication equipment, the release said.

In September, food inflation edged down to 1.6 per cent from 1.7 per cent in the preceding month, as the prices of non-cooked food items registered a smaller increase.

Services inflation came in at 1.4 per cent, slightly higher than the 1.3 per cent in August. This mainly reflected a larger increase in education services fees and a smaller decline in telecommunication services fees, which had collectively more than offset a moderation in the pace of increase in recreational and cultural services fees.

Accommodation costs fell by 2.5 per cent, easing from the 2.6 per cent decline in August, on account of a slower pace of decline in housing rentals.

Private road transport costs slipped 0.1 per cent, which was less than the 0.2 per cent decline in August, as the prices of motorcycles and scooters fell in September. However, the decline was more than offset by a steeper increase in petrol prices, a smaller drop in car prices, as well as an increase in Electronic Road Pricing (ERP) charges.

Dr Tan Khay Boon, senior lecturer at SIM Global Education, said that he expects the new cooling measures implemented by the Government in July to exert downward pressure on the imputed rent, causing further deflation on housing.

"The abundance in number of COEs will also reduce the private road transport costs," Dr Tan said.

"However, the upward trend in oil price is likely to raise utility prices and public transport fares with the average households feeling more inflationary pressure due to higher food price, medical care costs and utilities."

Looking ahead, MAS and MTI said that imported inflation is likely to increase on account of higher global oil and food prices.

"On the domestic front, the improving labour market should underpin a faster pace of wage growth in 2018 and 2019, compared to 2017. Growth in the unit labour cost for services has picked up recently. As domestic demand strengthens further, there could be a greater pass-through of higher import and labour costs to consumer prices," they said.

"However, the extent of overall price increases will be capped by greater market competition in several consumer segments, such as telecommunications, electricity and retail," they added.

MAS expects core inflation to rise modestly in the months ahead and come in at the forecast range of 1.5 per cent to 2 per cent this year and between 1.5 per cent and 2.5 per cent in 2019.

CPI-All Items inflation is projected to be about 0.5 per cent this year, before picking up to 1 per cent to 2 per cent next year.

UOB senior economist Alvin Liew said that the MAS "sounded more hawkish in its outlook", and may further tighten their current monetary stance at their April 2019 meeting via another slight increase in the policy slope.

The monetary authority on Oct 12 tightened monetary policy for the second time this year, saying it expects the economy to continue to expand steadily and core inflation to rise.

"The biggest uncertainty for this view is how US-China trade tensions will evolve in the months leading up to April 2019," Mr Liew said.

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Singapore's core inflation eases to 1.8% in September

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(Updated: ) Share on Facebook Share on Twitter Share via E-Mail SINGAPORE: Singapore's core consumer price index (CPI) eased to 1.8 per cent year-on-year in September from 1.9 per cent the previous month, according to the latest data.

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Inflation is a sustained and continuous increase in general level of prices of goods and services in economy.

Based on the Inflation article, there are inflation and deflation in the different areas of sectors, like, accommodation, services and private road transport cost.

There are 2 causes of inflation:
1. Demand-pull
It is the increase in consumer demand for goods and services. Usually occurs at or close to full employment, when the economy is operating at or near full capacity. Thus, general price level is pulled up by the pressure from buyers' increase in their total expense.

2. Cost-push
It is the increase in cost of production. Usually occurs when there is competition of resources to produce goods and services. Thus, general price level in economy is pushed up by the pressure on the cost of production.

Other factors for inflation may be due to economic growth which has been rising and accumulated on a year to year basis.

Economist forecast that inflation will increase is because of the economic growth that rises steadily. The increase of employment income will lead to consumers having more money to spend and the demand-pull inflation will occur. It will also directly affect cost-push as overall increase in cost of goods will result in increase of labor cost.

Reasons mentioned in article:
- 'upward trend in oil prices'
It is cost-push inflation as people will feel more pressured towards the increase of food price, medical and utilities cost. This is due to the increase of utility prices and public transport fare from the increase  of oil price.
- 'imported inflation'
It is cost-push inflation as the price of imports increase, which also increase price of domestic goods and raw materials. In the article, imported inflation is likely to increase oil and food price.
- 'domestic demand strengthens further'
It is both demand-pull and cost-push inflation. Due to the increasing demand of goods and services, it has lead to higher import and labor cost as compared to the consumer prices.
- 'labor cost'
It is cost-push inflation as the overall increase in cost of goods will result in increase of labor cost. And also partly because of the increasing amount of demand by the consumers.