Chapter 1: Economic Background

1.1: Economic Background of Singapore

Singapore is one of the most open, and thus competitive, markets in the world. It has a
highly developed and successful free-market economy. It enjoys a remarkably open and
corruption-free environment, stable prices, and a per capita GDP higher than that of most
developed countries. The economy depends heavily on exports, particularly in consumer
electronics, information technology products, pharmaceuticals, and on a growing financial
services sector. Singapore's economic strategy proved a success, giving a real growth of 8.0%
from 1960 to 1999. Real GDP growth averaged 8.6% between year 2004 and 2007, and hit a
negative 1% in year 2009. In 2010, Singapore was the third fastest growing economy in the
world – with a real GDP growth rate of 14.8%.

After the independence in 1965, Singapore faced decline due to lack of physical
resources and a small domestic market. But with motivation, the Singapore Government adopted
pro-business, pro-foreign investments, export-oriented policy, combined with state-directed
investments in strategic government-owned corporations. During the 1997 Financial Crisis,
while most of its neighbouring economies were sliding, Singapore’s remained relatively stable.
Although Singapore has no natural resources and a very small land area, its economy is driven
by exports in electronics manufacturing and machinery, financial services, tourism, and the
world’s largest cargo seaport. Singapore's fantastic location on major sea lanes and its
industrious population have given the country an economic importance in Southeast Asia without
considering its small size.

The economy of Singapore is best described as a mixed economy. Although the country
strongly advocates free-market policies and practices, government intervention is also evident in
macroeconomic management and major factors of production such as land, labor and capital
resources. Singapore has attracted major investments in pharmaceuticals and medical technology
production and will continue efforts to establish Singapore as Southeast Asia's financial and
high-tech hub.

1
1.2 Economic Background of Ireland

Ireland was a small, modern, trade-dependent economy. Ireland was among the initial
group of 12 EU nations that began circulating the euro on 1 January 2002. GDP growth averaged
6% in 1995-2007, but economic activity has dropped sharply since the onset of the world
financial crisis, with GDP falling by 3% in 2008, 7.6% in 2009, and less than 1% in 2010.

Ireland entered into a recession in 2008 for the first time in more than a decade, with the
subsequent collapse of its domestic property and construction markets. Property prices rose more
rapidly in Ireland in the decade up to 2007 than in any other developed economy. Since their
2007 peak, average house prices have fallen 47%. In the wake of the collapse of the construction
sector and the downturn in consumer spending and business investment, the export sector,
dominated by foreign multinationals, has become a key component of Ireland's economy.

In 2008 the former COWEN government moved to guarantee all bank deposits,
recapitalize the banking system, and establish partly-public venture capital funds in response to
the country's economic downturn. In 2009, in continued efforts to stabilize the banking sector,
the Irish Government established the National Asset Management Agency (NAMA) to acquire
problem commercial property and development loans from Irish banks. Faced with sharply
reduced revenues and a burgeoning budget deficit, the Irish Government introduced the first in a
series of draconian budgets in 2009.

In addition to across-the-board cuts in spending, the 2009 budget included wage

reductions for all public servants. These measures were not sufficient. In 2010, the budget deficit
reached 32.4% of GDP - the world's largest deficit, as a percentage of GDP - because of
additional government support for the banking sector. In late 2010, the former COWEN
government agreed to a $112 billion loan package from the EU and IMF to help Dublin further
increase the capitalization of its banking sector and avoid defaulting on its sovereign debt.

Since entering office in March 2011, the new KENNY government has intensified
austerity measures to try to meet the deficit targets under Ireland's EU-IMF program. Ireland

2
achieved moderate growth of 1.4% in 2011 and cut the budget deficit to 9.1% of GDP. In 2012,
Ireland’s real GDP growth rate decreases to 0.9%. Although the recovery slowed in 2012
because of weaker EU demand for Irish exports, Dublin managed to trim the deficit to about 8.5%
of GDP.

3
Chapter 2: Analysis

2.1 The comparison of Gross Domestic Product (GDP) between Singapore and Ireland and
its reasons. (Real Growth Rate)
20
15
10
Singapore
5
Ireland
0
2008 2009 2010 2011 2012
-5
-10

Country\Year 2008 2009 2010 2011 2012

Singapore 1.7 -1.0 14.8 5.2 1.3
Ireland -3 -7.6 -0.8 1.4 0.9

Singapore achieved the highest percentage of Gross Domestic Product (GDP) in year
2010 which is 14.8% and the lowest in year 2009 which is -1.0%. Meanwhile, Ireland achieved
the highest percentage of GDP rate of 1.4% in the year 2011 and the lowest percentage of -7.6.%
in year 2009.

During the year 2008 to 2009, the percentage of Singapore GDP was decreased from 1.7%
to -1.0% because of the financial and economic crisis. Singapore was the first East Asian country
to fall into a recession from the current global economic crisis after July 2008. Due to the current
economic downturn, Singapore has experienced one of its most severe recessions since
independence. Manufacturing in Singapore had slowed down due to the falling demand. The
financial sector also been affected by the growth of credit value. Economic conditions in
Singapore have been affected by the huge loss in wealth from the collapse of the stock market
that came with global crisis.

For the year 2009 to 2010, the percentage of GDP in Singapore was greatly improved by
13.8% which is from -1.0% increased to 14.8%. An increase in exports and tourism and a

4
booming manufacturing sector were the main drivers of Singapore's economic expansion.
Singapore's Asia-bound exports also increased significantly. Total 2010 export growth is
projected at 17%-19%, up from estimates of 15%-17% earlier this year. Growing Asia-bound
exports and increased consumer spending will offset future dangers from a weak European
economy. Domestic demand continues to expand briskly, which should help to offset some of
the emerging weakness in export markets.

Meanwhile, during the year 2008 to 2009, the GDP of Ireland was -3.0% and -7.6%
respectively. Ireland has experienced a severe financial crisis characterized by a systemic
banking crisis and a significant economic adjustment. The Irish economy began to experience a
slowdown in 2008. The Irish property market collapsed, putting pressure on the Irish banks,
which had a significant portion of their loan books in real estate. This, in turn, caused a collapse
in the government’s finances because of a large dip in the amount of revenue raised from value-
added tax and tax on property transactions. The Irish banking sector, like many worldwide, came
under intense pressure in 2008 following the collapse of the construction industry and an end to
Ireland’s property boom.

For the year 2010 to 2011, the GDP of Ireland increased from -0.8% to 1.4%. This is
because the expenditure side of the accounts exports in Ireland performed strongly in 2011,
while imports declined slightly. The combined effect resulted in overall growth of net exports
increased. This growth more than offset the declines which took place in the final domestic
demand components of expenditure. The overall resilience of our exports reflects a combination
of factors. Sectors like ICT services, software and web-based services and international financial
services have all posted significant growth in both investment and trading activities since 2010.
In recent years, many Irish domestic enterprises have re-oriented their growth strategies toward
exporting. This resulted in a significant uplift in trade flows, generated in such sectors as food
and drink, legal and financial services, analytics and consulting services, etc. The same factor
also contributed to the growing number of countries now actively serviced by Irish exporting
firms.

In Conclusion, GDP of Singapore is better compared to GDP of Ireland. This is due to the
fact that Singapore is a well-developed country which has a better economic growth rate as
compared to Ireland.

5
2.2 The comparison of Unemployment Rate between Singapore and Ireland and its
reasons.

Unemployment rate
16
14
12
10
8 Singapore

6 Ireland
4
2
0
2008 2009 2010 2011 2012

Country\Year 2008 2009 2010 2011 2012

Singapore 2.2 3.0 2.1 2.0 1.9
Ireland 6.1 11.8 13.7 14.4 14.7

At the beginning of the year 2008, the unemployment rate of Singapore and Ireland is 2.2%
and 6.1% respectively. The unemployment rate had started growing up since 2008 in both
countries. Singapore has reached its highest unemployment rate 3.0% in year 2009. Meanwhile,
the rate of unemployment in Ireland is 11.8%. Unemployment rate of Ireland continue to grow
drastically in year 2010 that is 14.4% but Singapore has dropped to 2.1%. In years 2011,
unemployment rate of Ireland is still continued to grow to 14.4%, but Singapore has dropped to
2.0%. Singapore has reached its lowest unemployment rate 1.9% in year 2012, but Ireland has
risen to 14.7%.
From the year 2008 to 2009, Singapore unemployment rate has increase from 2.2% to its
highest point that is 3.0%. This is due to the economic crisis in the year 2008. Economic crisis has
made a great impact on Singapore unemployment rate. Besides, manufacturing in Singapore has been
cut down as the demand drop. Many factory workers have been fired as the manufacturing has

6
decreased. Many Singapore companies also cut back on manpower to cope with the global
financial meltdown.

During the year 2011 to 2012, Singapore managed to drop the unemployment rate from
2.0 % to its lowest 1.9% due to the strong employment creation. The government also undergoes
many financial actions to control the unemployment rate. One of the actions is cut taxes in recent
to encourage companies to set up operations or expand in the Southeast Asian nation in attracting
more investment.

From the year 2008 to 2009, the unemployment rate of Ireland has increased drastically,
which is from 6.1% to 11.8%. This is because the global economic crisis in year 2008. Since that
year onward, country economic has facing a downturn. Many companies have to cut down
manpower to keep their business cost low. Some of it even bankrupt since their production line
has been affected seriously. When there is an economic downturn, it usually takes several
months before the unemployment rate begins to rise. Once the economy starts to pick up again,
employers usually remain cautious about hiring new staff and it may take several months before
unemployment rates start to rise.

Meanwhile for the year 2011 to 2012, the unemployment rate of Ireland just rose a little
from 14.4% to 14.7%. This is because the economy of Ireland starts to recovery. The enterprise
Ireland, the body which supports the growth and development of Ireland exporting companies
provided many job opportunities to the public to help to reduce the unemployment rate. Besides,
government prepares the budget for the year 2012 to control the unemployment rate. Many
citizen also have immigrate to other country as this could help to maintain the unemployment
rate from continue to rising. Hence, the unemployment rate of Ireland is just rise a little compare
to the previous year.

As a conclusion, Singapore unemployment rate is better than Ireland. This is because

Singapore unemployment can always be maintain at a certain level. Although facing the
economic crisis in year 2008, Singapore still can quickly recover from it and reduce its
unemployment rate. Hence, Singapore is better than Ireland.

7
2.3 The comparison of Inflation Rate (GDP Deflator) between Singapore and Ireland.

10

Singapore
0
Ireland
2008 2009 2010 2011 2012
-5

-10

Country\Year 2008 2009 2010 2011 2012

Singapore -7.7 0 8.5 0.5 2.1
Ireland -2.3 -4.1 -2.6 -0.4 1.9

Based on the graph and table above, Singapore experienced the lowest inflation rate in
the year 2008 which is -7.7%, whereas Ireland has the lowest inflation rate of -4.1% in the year
2009.

In year 2008, the percentage of inflation rate in Singapore is very low, which consider as
the lowest percentage of inflation rate from year 2008 to year 2012. The reason that caused this
lowest percentage of inflation rate in Singapore is global financial crisis as Singapore fall into a
recession from the current global economic crisis in year 2008 and huge loss in wealth from the
collapse of the stock market that came with global crisis. This depressed domestic demand,
reducing consumption and investment in assets. This clearly reflects the greater vulnerability of
the Singapore economy to global economic shocks.

Next, the percentage of inflation rate has greatly increased from 2008 to 2010, which is
from -7.7% in year 2008 to 0% in year 2009 then followed by 8.5% in year 2010. Between the
year 2008 and 2010, the percentage of inflation rate in year 2009 is 0%. This is because
Singapore has strengthened and renewed the exports. In year 2010, Singapore has a very high
percentage of inflation rate due to the higher wages throughout the economy from tight labor
market and investors from the developed world keen to seek more bang for their buck invested in
8
commodities, equities and other asset classes such as property. This drove up prices, thus
contributing to goods inflation. As an importer of intermediate and final goods globally,
Singaporean firms and consumers faced higher prices. However, the percentage of inflation rate
in Singapore has dropped back to a moderated growth which is 0.5% in year 2011 and 2.1% in
year 2012. Although the percentage of inflation rate in Singapore is a little bit higher, but this do
not affect the economics in Singapore.

Whereas, the percentage of inflation rate in Ireland is -2.3% in year 2008 and continually
decreases to -4.1% in year 2009. The decreasing of this percentage is caused by global financial
crisis as the same situation like in Singapore. In year 2010, the percentage of inflation rate in
Ireland has increased to -2.6% because of the increasing prices in certain things like education,
transport, alcohol beverages and tobacco, but still regarding as a negative percentage.

After that, there is an increasing in percentage of inflation rate in year 2011 which is -0.4%
but still regarded as negative percentage. The inflation rate in Ireland has continually getting
deflation from year 2008 to year 2011 because Ireland has a weak consumer demand and
domestic inflationary pressures remain depressed since Ireland always remain cost push inflation
without taking risks due to the fear of increasing in inflation rate. Although this year has a
negative percentage, but it has almost rose up to 0% which can be consider as a moderated
growth. Then the percentage of inflation rate in Ireland rose up to 1.9% in year 2012 because of
some increasing price pressure in oil. However, it is still consider as a moderate growth and
inflationary remains weak.

In conclusion, Singapore is better than Ireland because Singapore has a lower average
inflation rate, whereas Ireland has a deflation in its country.

9
2.4 The comparison economic activities between Singapore and Ireland.

Economic Activities Economic Activities

in Singapore in Ireland
0.00% 1.80%
26.80% 26.20%
Agriculture Agriculture
Industry Industry
Service Services
73.20% 72.00%

Pie Chart (1) Pie Chart (2)

Singapore’s agriculture is non-existent. It has less concentration on agriculture sector

because Singapore has lack of land space for planting crops. Therefore, the GDP of agriculture is
0% in 2012. Although Singapore continues to retain a small agriculture base – the farming sector
produces poultry, eggs, pork, some vegetables and fish – domestic demand for food far outstrips
the local supply. As such, Singapore imports a vast amount of its food from overseas markets
such as China, Indonesia, Thailand and Australia.

Since the country’s independence in 1965, manufacturing continues to be a key industry

for Singapore. In 2012, industry was responsible for 26.8% of Singapore’s GDP. In addition,
Apple Computer manufactured PCs in Singapore in 1981, and disc drive manufacture began in
1982. However, in 1985, Singapore's economy declined for the first time in 20 years. One of the
factors was high wages, which made Singaporean products less competitive on the world market.
Other reasons for the economic downturn included a slumping demand for oil and electronic
products and the economy woes of Malaysia, Indonesia, and other important trading partners.

Next, Singapore’s very business-friendly environment has not only encouraged

investment in manufacturing. It is the service sector that drives the economy in Singapore. In
2012, it provides jobs to million workers and employees, and it creates 73.2% of the GDP.
Commerce and trade, shipping and logistics are essential industries. The Port of Singapore is the
busiest cargo port in the world: the country has a flourishing import and/or export trade with
many other countries. In general, the Singaporean government favors globalization and free trade.
10
Import tariffs are low to non-existent. The tiny state is an active member of multinational trade
organizations. It has entered into free trade agreements with plenty of foreign countries too.
Other than shipping and storage, banking, finance, and insurance make up a large part of the
economy in Singapore.

The GDP of agricultural sector in Ireland during 2012 is 1.8%, because agriculture, once
the most important sector, is now dwarfed by industry and services. This is due to the economic
downturn. The agriculture products that Ireland produced are barley, potatoes, wheat, beef
and dairy products. Growth in agriculture has a huge knock-on effect in the rest of the Ireland
economy. For every RM100 of agricultural output, there is a further RM73 of output in the wider
economy. Besides, farming remains a low-income sector. Farmers simply cannot afford any
further cuts in funding for vital farm schemes, as this will undermine activity and output at farm
level, damaging the potential of the agriculture-food industry and reducing growth in the national
economy.

In the industry sector, pharmaceuticals, chemical, computer hardware and

software, food products, beverages and brewing and lastly medical devices
manufacturing are the leading industries. Many of these manufacturers receive British
government financial backing. Due to this reason, many people start to involve themselves in the
industry sector instead in the agricultural sector. Besides, government also encourage the
industry to export their product in order to increase the country revenue. People will also earn
more revenue by exporting their manufacturing products rather than exporting agricultural
products. Therefore, the industry sector percentage is 26.2% that is higher than the agricultural
sector.

Lastly, the most important sector of the Ireland is service sector. This sector has a GDP of
72% which is the highest among the three sectors. This is because Ireland is a very profitable
location for financial services, it has a combination of high productivity and a cost base that is
very competitive with other country which have similarly sophisticated ecosystems. There are
only a limited number of places in the world with such an ecosystems. As a result, Ireland has
built a deep pool of staff, managers, professional advisers, regulators and service providers with
sophisticated domain knowledge in the key mobile financial services sectors.

11
2.5 The comparison between export and import activities between Singapore and Ireland.

Import
Singapore Machinery and equipment,
chemical, foodstuff,
consumer good, fuel
Ireland Wood, machinery equipment,
medical product, organic
chemical
Export
machinery and transport,
equipment(included
electronic), petroleum
product(mineral fuel),
chemical
Machinery and equipment,
chemicals, pharmaceuticals,
animal products

Singapore has long been known as an important ‘port of call, for traders, especially
those dealing between eastern and western time zones. Singapore’s main imports are machinery,
equipment, chemical, food stuff, consumer goods and fuel. Singapore are more relay on
purchasing raw goods and refining them for re-export so they could earn more revenue. With its
small domestic economy, Singapore imports mostly everything around the world from food to
clothing and most of the thing in between. Reference from the ministry of the environment and
water resource, the daily requirement of water in Singapore is 1.36billions per day. However, 50%
of water consumption is supplied by rainfall and the remainder is from imports from Malaysia.
Singapore mainly depends on rain as a natural source of water due to no river in Singapore. The
primary import partner of Singapore are US (14.7 of total import), Malaysia (11.6%), china
(10.5), Japan (7.6 %), Indonesia (8.5%), South Korea (5.7%). The total imports of Singapore are
US$310.4 billion.

On the export side of Singapore, Singapore’s mainly exports are machinery and transport
equipment (included electronic), petroleum products, chemicals and related product. Primary
export partners of Singapore are Hong Kong (11.6 of total export), Malaysia (11.5%), US
(11.2%), Indonesia (9.7%), China (9.7%), Japan (4.6%). Machinery and transport equipment are
form of computer parts, telecommunications equipment, and other consumer electronic.
Singapore do not have and reserve any oil and natural resources, but it operates third large
refinery country in the world. The total value of export of Singapore US$ 351.2 billion.
12
 Ireland imports a huge amount of wood because its own timber industry has subsided due
to deforestation and industrial set ups. Ireland also imports 16% of electronic component, 15% of
fuel, 10% of motor vehicle, 10% of food and 9% of medical product. The import partner of
Ireland are UK (34%), US (12%), Germany (8%), Netherlands (5%), China (6%), France (4%).
The total value import of Ireland Us$113.6.

The total value export of Ireland is US$ 63.1 billion. Ireland’s trade has been the reason
for the nation’s prosperity. Although the recession devalued the sterling and forced the
government to implement various strategies, foreign companies, such as Apple, Microsoft, IBM,
oracle, Google ,eBay, Pfizer, Cadbury-Schweppes, Dell and Intel, have kept the exports alive
through their wide range of products. Ireland is one of the biggest medical product exporters 28%
of medical product, 21% of organic chemicals, 12% of software, 8% of food and animal products.
The main export partners of Ireland are US (23%), UK (16%), Belgium (14%), Germany (7%),
France (5%), and Switzerland (4%).

Conclusion, Singapore’s import and export is far better than Ireland due to better country
management and citizen’s education. The difference of Ireland between Singapore and Ireland in
export is US$ 288.1 billion and the difference of the import of Ireland between Singapore is
US$ 196.8.

13
Chapter 3: Conclusion

3.1 Describe the current economic problems/challenges faced by the chosen countries and
recommend ways to overcome them.

The challenge faced by Singapore and Ireland is their GDP rate of both countries are
falling in some of the years. Singapore and Ireland have the lowest GDP rate in year 2009. This
is due to the fact of the financial crisis and economic crisis happened in year 2009. The ways to
overcome is the government should improve the technology in their country. Besides,
government should plan well on export and import activities of the country which they should
increase export and reduce import in order to increase the GDP rate. Furthermore, GDP rate can
be increased by the investment of the country because more investment will increase more
capital for production, thus will results in more output and higher growth. Overall, the GDP of
Singapore is decreasing after achieved the highest percentage of GDP in the year 2010, whereas
the GDP of Ireland is slowly increasing after fall to the lowest percentage of GDP in the year
2010.

Next, Singapore and Ireland also faced the economic problem of unemployment.
Singapore experienced a low and constant of unemployment rate from the year 2008 to 2012
except for the year 2009 which is the highest among the years due to the financial crisis.
Meanwhile, Ireland experienced high unemployment rate which the rate is keep on increasing
from year 2008 to 2012. Economic crisis has made a great impact on the both country
unemployment rate. Many companies of the both countries cut down on manpower to cope with
the global financial meltdown which caused the unemployment rate to increase. The ways to
overcome is the government should take an appropriate action immediately to control the rising
of unemployment rate. For example, the immigration to other country also could help to maintain
the unemployment rate from continue to rising. Government should also provide plenty of job
opportunities to the public so that it could help to reduce the unemployment rate.

Inflation is another economic problem faced by Singapore and Ireland. The economic
crisis that happened in the year 2009 have greatly affected the inflation rate in both of the
countries. Singapore has higher inflation rate compared to Ireland because Singapore has high
domestic cost pressures, which stem from supply side conditions. Whereas, Ireland always

14
maintain cost push inflation and caused the inflation rate to be low. To overcome the rise in
inflation, The Central bank could increase interest rates. Higher rates make borrowing more
expensive and saving more attractive. This should lead to lower growth in consumer spending
and investment. Besides, the government can also increase taxes and cut spending. This will
improves the budget situation and helps to reduce the demand in the economy. Lastly,
government should control the price of goods and services in the market.

15
 Reference & Appendices

1.1 Economic Background of Singapore

http://www.economywatch.com/world_economy/singapore/

http://gnvconsultancy.com/introduction/economy.html

https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html
1.2 Economic Background of Ireland

https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html

2.1 The comparison of Gross Domestic Product (GDP) Singapore and Ireland (Real Growth Rate)

http://www.tradingeconomics.com/ireland/gdp-growth

http://www.indexmundi.com/ireland/gdp_real_growth_rate.html

http://www.indexmundi.com/singapore/gdp_real_growth_rate.html

https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html

http://www.economywatch.com/world_economy/ireland

http://www.economywatch.com/economic-statistics/country/Ireland/

2.2 The comparison of Unemployment Rate between Singapore and Ireland

http://www.tradingeconomics.com/ireland/unemployment-rate

http://www.tradingeconomics.com/singapore/unemployment-rate

http://www.indexmundi.com/ireland/unemployment_rate.html

http://www.indexmundi.com/singapore/unemployment_rate.html

http://www.economywatch.com/economic-
statistics/Ireland/Unemployment_Rate_Percentage_of_Labour_Force/

16
 https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html

https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html

http://www.economywatch.com/economic-
statistics/Singapore/Unemployment_Rate_Percentage_of_Labour_Force/

2.3 The comparison of Inflation Rate (GDP Deflator) between Singapore and Ireland

http://www.indexmundi.com/facts/singapore/inflation

http://www.indexmundi.com/facts/ireland/inflation

http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG

2.4 The comparison between Economic Activities (by sectors) between Singapore and Ireland

http://www.ifa.ie/LinkClick.aspx?fileticket=4Czi9yEm5AI%3D&tabid=586

http://www.internations.org/singapore-expats/guide/16061-economy-finance/the-economy-of-
singapore-16045

https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html

https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html

2.5 The comparison between Import and Export Activities between Singapore and Ireland

http://www.tradingeconomics.com/ireland/imports

http://www.tradingeconomics.com/ireland/exports

http://www.indexmundi.com/ireland/exports.html

http://www.indrmundi.com/ireland/imports.html

http://www.mti.gov.sg/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-
2012/FullReport_AES2012.pdf

17