This paper is to assess a country's current macroeconomic position and discuss what policy options have been adopted by the monetary and fiscal authorities in the past years in order to correct any inflation, unemployment or growth problems that exist. In this paper, Singapore's economy will be discussed.
Like most other countries, Singapore wants growing living standards, high employment and low unemployment, as well as avoidance of recessions and inflation. These things are known as the targets of policy. Instruments are the policies used to achieve the targets. Two main instruments that are used in the economy are fiscal and monetary policies. The macroeconomic policy problem is to choose appropriate values of the policy instruments in order to achieve the best possible combination of the outcomes of the targets. This is continually changing problem because targets are perpetually being affected by shocks from various parts of the world economy.
Singapore is an important hub for the South East Asian region. It has a highly developed and successful free market economy, and strong service and manufacturing sectors. Singapore's economy always depended on international trade and on the sale of services. Its major industries include petroleum refining, electronics, oil drilling equipment, rubber products, processed food and beverages, ship repair, entrepot trade, financial services and biotechnology. It is moving to reduce its reliance on the manufacture and export of electrical products by developing its chemical and petrochemical industries.
Singapore's small population and dependence on external markets and suppliers has pushed Singapore toward economic openness, free trade, and free markets. This and the Government's dominant role in planning and regulating economic development have been the key factors in Singapore's consistently strong economic performance. Singapore is an economy characterized by a seemingly paradoxical adherence to free trade and free markets in combination with a...