Singapore is an island city in South-East Asia and is a global financial centre with a multi-cultural population of 5.7 million people. The country got its independence from Malaysia in 1965 and ever since it got independence, the country has moved its steps towards overall development and enjoys a respectable reputation of almost a perfect country in the world. The country boasts a wonderful skyline and is also known as city of skyscrapers. Singapore federal laws invite a lot of expats to increase the investments and provides decent ease of doing business and trade related activities. Real estate industry plays a crucial role in the overall GDP of Singapore. The industry has faced a lots of challenges in the record of last three years and has declined a lot. Looking at the current year’s GDP, it has dipped to 3% as compared to the last year’s GDP which was 3.
5%. However, many new developers are reluctant to enter the real estate market in the present situation but the overall economy and the industry expects a boom and overall improvement in the coming years. Economists state that Singapore’s economy is expected to grow at a compound annual growth rate of 2.8% till 2020. These statistics show a significant slowdown from the previously recorded compound annual growth rate of 5.
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8% which was estimated in the previous decade. This represents the nature of a developed nation’s economy and shows the effects of the global economic environment. The country’s economy is reaching a mature stage and the country’s economy does not depend on the same factors of production which had helped earlier to achieve the phenomenal growth. Singapore has a large dominance of ageing population over the total population. Since the population if growing old, and the labour restrictions are increasing, these crucial factors have lowered the speed of the growth of the economy. Moreover, the Singapore government does not encourage foreign labour to work in Singapore and have set certain limitations and workforce regulations. The government acts ethical in encouraging the local workforce to work but it would be a great enhancement and prospects of growth would increase if the government provides relaxation to foreign labour force restrictions. Considering demand perspective of the economy, then a slow global growth rate with the decline in trade indicates that the contribution to high growth rate of the economy cannot depend on the external factors.
However, there is a clear mismatch between the employer’s expectations from the employees and the employees’ skill sets, particularly in the Information Technology sector which have always proven to be a growth contributor towards an economy. So, considering the abovementioned factors, there are no predictable solutions and because of dynamic business environment of the country, a high risk factor must be considered to adapt and adjust in this global business world. The economic policies which have been undertaken in the past 3-4 years such as Brexit and the increase in trade barriers after the election of Donald Trump in the United States of America have affected many countries’ economies and such events still have their reverberations to show. The European market overall has also seen a rise in unemployment levels along with slow wage growth rates. These kinds of external factors might lead to increased spending by the public into their domestic market instead of international market so it will ultimately lead to decline in the investments in Singapore market. The investments would be particularly be made on infrastructure and socio development sectors in the domestic market. Additionally, there might be a high probability of implication of high trade barriers in the type of increased tariffs and increased restrictions on the entry and exit of labour. All the above mentioned factors play a crucial role in affecting the Singapore’s economy.
US Federal Reserve’s decision regarding the interest rates is also very crucial for the economy of Singapore. Interest rates were had already been increased by the US Federal Reserve in 2016 and continued to rise in 2017-2018 and is further expected to rise in 2019. The constant rise in the interest rates will lead to higher mortgage amounts for the household purchasers and would even increase the cost of capital and increase in the cost of operations for the builders and developers. This would reduce the spending power of the consumer, resulting in decreased investment and would hamper the expansion plans for the companies thereby, which therefore would affect the overall growth rate of the economy.
The Singapore dollar (SGD) is also losing its strength as it is in under much pressure because of a lot of investors are investing in the countries which are inversely related to the United States of America because those economies deliver a high rate of return. The Singapore Dollar has depreciated by over 7% against the United States Dollar in the last quarter of 2017. Nevertheless, this might increase the total exports to the United States market due to cheaper export rates but in the long tenure, there is a limited scope because of the foreign economies are increasingly becoming domestic oriented. Real Estate industry plays a crucial role in the overall GDP of Singapore. The Building and Construction Authority (BCA) of Singapore is focusing on overall improvement in the Singapore construction industry as the industry faced a lots of challenges in last 3 years and has dipped down a lot.
Focusing on the current year’s GDP, it has grown to 3% as compared to last year’s 3.5%. Many new players are reluctant to enter the market in the current situation but Singapore’s construction industry expects a boom in the coming quarter and expects an improvement in the coming years too.Singapore’s Nominal Gross Domestic Product per capita stands at United States $61,766 which is estimated for 2018, this is ranked at 9th in the world. The density of population is also very low in Singapore which stands just 8000 people per square kilometres and has a resident population of 5.
784 million people living in a total area of 719.1 square kilometres. Housing sector is a very crucial sector in Singapore because 90% of the families own their housing units.