Monthly Archives: May 2010

Fun Video on Market Failure – Externalities

Here is an interesting and funny video on Externalities in production:

Huck the Duck and Fin the Fish


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Filed under Humour, Microeconomics

Singapore’s economy grows 15.5 percent in Q1: govt

On Thursday 20 May 2010, 10:47 SGT

AFP: Singapore’s economy grew by a better-than-expected 15.5 percent in the first quarter year-on-year, spurred mainly by strong demand for electronics, government data showed Thursday.

 On a seasonally adjusted quarter-on-quarter basis, Singapore’s gross domestic product (GDP) surged 38.6 percent in the three months to March period, the Ministry of Trade and Industry (MTI) said.

 Initial government estimates released in April showed the economy expanded an annual 13.1 percent and 32.1 percent on a quarter-on-quarter basis.

 The MTI said the first quarter display was driven by the manufacturing sector’s annual 32.9 percent surge amid buoyant global demand for electronics products, especially semiconductor ships.

 “The strong momentum seen in the first quarter was broad-based, led by the manufacturing sector… The electronics cluster enjoyed the strongest growth, underpinned by strong global demand for semiconductor chips,” the MTI said.

 Other key industries also showed strong performance during the first quarter, it said.

 These included construction, which expanded 13.7 percent annually, wholesale and retail trade, which was up 17.7 percent while financial services surged 18.1 percent, the MTI said.

 Singapore’s economy has expanded for three straight quarters as the city-state stages a strong recovery from a recession triggered by the global economic and financial crisis that struck in late 2008.

 The MTI is maintaining its 2010 forecast for growth of 7.0-9.0 percent, a dramatic turnaround from last year, when GDP shrank a revised 1.3 percent.

 Despite the strong economic recovery, the ministry said Europe’s debt crisis and worries of excessive asset price increases in Asia were some of the downside risks that could derail the global economy, thereby hitting Singapore.

 Singapore, one of Asia’s wealthiest countries, has one of the world’s most open economies, which makes its vulnerable to volatility in the global economy.

Comment:  The confirmed figures for Singapore’s Q1 growth are better than expected, showing signs of a recovery –  the key driving force being the upturn in global electronics demand, notably semiconductor chips which Singapore exports.  Of course, there are downside risks such as what is happening in Europe and the growing asset bubbles.

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Filed under Macroeconomics

To Bail or not To Bail – That is the Question

Bailouts often present a moral dilemma. If the bailout is not given, the collapse of the firm could have drastic consequences both locally and globally – the so-called “Too big to fail” syndrome. If the government chooses to bail out the firm, there is no guarantee that the firm will use the bailout funds prudently and be responsible enough not to commit the same error again. It might even promote more risky behaviours as firms think that they can always rely on the government to bail them out should they run into trouble.

The recent bailout given to Greece by the EU is yet another example. Will it lead to more responsible fiscal spending by the government and to what extent will the auterity measures materialise?

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Filed under Humour, Macroeconomics