econs assignment (PLS READ REQUIREMENTS N ARTICLE CARFEFULLY)

 

Analyse the article chosen to identify linkage between the economic concepts you have learnt in class with the discussion of the macroeconomic event in the article.

Apply the economic concepts and models learned to discuss the economic challenges faced by the economy concerned and to explain the rationale for the economic policy

(ies) chosen by the government to overcome the challenges. You should use other related news articles, reports and academic journals to support your discussion as

well

Where applicable, illustrate your discussion with diagrams and economic models to enhance your discussion

More marks will be awarded for reports, which provide more comprehensive, balanced and in-depth analysis with adequate referencing to the economic concepts and models

The newspaper article will serve as the focus of your discussion. However, your discussion is not restricted to just the content of the article chosen. You are free

to discuss on other relevant information (from other sources) which relate to the main macroeconomic event you have chosen. Do not rely on one source and do compare

and contrast perspectives. For use of internet sources, you should note that there is no quality control over the information in the web. As far as possible, you

should choose website established by authoritative institutions such as the World Bank or the respective countries’ government official websites. And avoid Wikipedia

definitions!

This assignment is aimed at a number of competency elements, specifically: ï‚· Researching in terms of searching for and evaluating newspaper, magazine articles,

reports and academic journals that are suitable for this assignment. ï‚· Analysis of the information presented in the article and how the macroeconomic event could be

explained using economic models. ï‚· Assessing the suitability of the economic models to analyse the macroeconomic event and what are the limitations of the models. ï

‚· Presentation in putting forward the information and analysis you have in a form, which is clear, accurate and easy to understand.

Additional assignments guidelines: ï‚· The report should have a content page, and its main discussion shall be about 2,500 words. ï‚· Assignments should be type-

written using 12-font size and 1.5 line spacing. Please include page number. ï‚· References are a key aspect of an essay. Any idea, theme, or argument that you found

in the literature and used in your essay must be cited within the essay. ï‚· Include a reference List and bibliography at the end of your assignment.

Article

Singapore productivity growth sluggish: Nomura

PUBLISHED OCT 27, 2015, 5:00 AM SGT

By Grace Leong

Pick-up unlikely in next few years amid slow global growth, ageing population, looming US rate hike: Report

A new report has found that the results of Singapore’s efforts to raise productivity growth to 2 to 3 per cent and rely less on foreign labour have been less than

stellar so far.

The report comes as the Republic reaches the halfway mark of its economic restructuring agenda.

Nomura Global Markets Research analysts warn the lack of success to date could further dampen growth, which has already shrunk to 3.8 per cent since restructuring

efforts began in 2010, to 2.1 per cent over the following five years.

LOW TAKE-UP FOR GOVT SCHEMES

It seems to us that the failure of the restructuring drive to lift productivity growth has to do with implementation. The take-up of various schemes to help firms

improve productivity has not been widespread.

NOMURA GLOBAL MARKETS RESEARCH ANALYSTS, on the factors leading to the less-than-stellar productivity growth Analysts Euben Paracuelles and Brian Tan said productivity

growth is not expected to pick up in the next few years because of falling global growth, a rapidly ageing population and tightening financial conditions when the

United States interest rate hiking cycle starts.

That may result in debt-servicing problems as household and corporate debt levels here are already relatively high – at 75.3 per cent and 78 per cent of gross domestic

product (GDP), respectively.

Further, sharply higher domestic interest rates could have repercussions on the broader economy if they lead to a protracted downturn in the property market.

If productivity growth remains sluggish, it could mean that restructuring is unlikely to be completed by the end of the decade and an unexpected recession could even

derail this effort, they warned.

Nomura attributed the drop in productivity to a higher employment share of lower-productivity sectors, as well as increased hiring of parttime and older workers, who

tend to be lower-skilled.

Other factors include rising costs amid higher global economic uncertainty, leaving little impetus for firms to invest in productivityenhancing capital despite various

government schemes.

“It seems to us that the failure of the restructuring drive to lift productivity growth has to do with implementation. The take-up of various schemes to help firms

improve productivity has not been widespread,” Nomura said.

Smaller firms, in particular, seem to have struggled to invest more or overhaul their work processes while trying to stay afloat as costs mounted once restructuring

began.

Tepid foreign demand has made restructuring efforts more difficult.

“With net exports accounting for 20 to 30 per cent of real GDP, it is very difficult for Singapore to completely decouple from the softness in foreign demand… This

in turn probably limited the extent to which firms could raise prices to restore profit margins,” Nomura said.

The rise in unit labour costs may force firms to raise prices, stoking concerns over stagflation, or structurally higher core inflation despite lower economic growth.

All this will have important policy implications, it said.

“Fiscal policy is likely going to be a constant balancing act, with the Government likely to stay the course in restructuring, incurring more fiscal costs. We expect

the Government to run smaller fiscal surpluses annually and over the medium term raise more revenues, making higher tax rates for the upper-income income brackets

likely,” Nomura said.

Despite slowing GDP growth, the outlook for Singapore corporates may not be as bleak. More than 51 per cent of the firms’ revenues are derived overseas, and growth in

the rest of the region is likely to offset pressure on their overall earnings.

Accessed on 6 February 2016 from www.straitstimes.com/business/economy