The Economic Crisis in Singapore

455 Words2 Pages
Since its independence, Singapore has been a symbol of organization and success, especially economically. These days, however, the big news around town is about the economic downturn of the Southeast Asian region. Singapore grew at 7.8% in 1997 - a tremendous amount considering that the goal of the United States is no more than 3% per year. In the past quarter (third quarter), the Singapore economy shrunk by 1.5%. If the fourth quarter also shrinks, it will be considered a recession. The 1.5% decrease was the first contraction in 13 years, again, a tremendous feat. Even the unemployment rate has crept up from only 2.3% to 4.5% in September and is expected to approach 7% in 1999. The recent economic collapse of many of the Southeast Asia nations has hurt Singapore for several reasons. As a major port, a tremendous amount of trade from countries like Indonesia and Malaysia come through Singapore. With the recent negative economic events in these countries, the ports of Singapore as well as investment in Singapore has been declining. A lot of the growth that Singapore has maintained has been attributed to the still strong U.S. economy. With the U.S. economy in larger question, the Singapore economy is under even more pressure. The Singaporese are fighting back. They recently begun to reduce business costs in initiating wage restraints. They also cut the Central Provident Fund contributions. Next, they are trying the enhance the competitiveness of their exports. They are also encouraging their banks to merger and are making their financial-sector more liberal in order to attract more foreign investment. Additional funds are going to be used for infrastructure as well as for education. High-tech entrepreneurial businesses are also going to be given additional aid. Finally, there is a goal to prevent the restriction of the free flow of capital, goods, and services. Just recently, in November, Singapore took its first steps in merging its futures market with its stock exchange in order to make their markets more efficient. The country also hired several people to study their long-term competitiveness position. The educational goals remain to have one computer for every two students. Plans are expected to be released soon of a cut of at least 10% of the Central Provident Fund. The beauty of Singapore is that the cut is expected to be completely accepted with little more than a weep. In fact, the move is completely supported by most Singaporeans.
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