IntroductionSince her independence in 1965, Singapores economy has seen rapid development, placing her amongst the worlds most competitive economies (siteresources.worldbank.org, 2014). This has been achieved by an open and conducive business environment with a stable political climate, rendering her a favourable choice amongst global investors. Because of her scarce natural resources, Singapores competitive advantage lies in her human capital that is globally recognised and sought after as a skilled workforce. Also critical to her competitiveness is Singapores strategic geographical location, which has served her well by way of a bustling port, positioning her as a leading logistics and trading hub in the region.

Production Output Performance Analysis(tradingeconomics.com, 2014)Singapore has witnessed a generally steady growth in GDP over the past decade, with an average 6.3 percent growth in her annual GDP from 2004 2013. Whilst the 2009 global financial crisis took its toll on the Singapore economy resulting in a slight slump in GDP, she recovered from it beautifully, clocking an exceptional growth of nearly 15% in 2010 (BBC News, 2014). Accordingly, Singapores GDP per capita went from US$27,403 in 2004 to more than twice that of US$55,183 in 2013. This remarkable performance was dominantly attained by a boost in labour supply.Due to Singapores finite resources, a key challenge faced by Singapore was to provide adequate labour to meet the demands of economic activity in the country. Amidst declining citizen birth rates and an ageing population, Singapore responded with a host of policies designed to attract foreign manpower at both the high and low ends of the labour spectrum to overcome the limitations of local human capital. Foreign employment growth rates soared from a negative 6.3 percent in 2002 to a staggering 19 percent by 2007; by 2010, the foreign born comprised a significant 34.7 percent of Singapores labour force (migrationpolicy.org,2014).This influx of foreign labour allowed Singapores economy to flourish, attributing to its overall impressive showing in the last decade.

Labor Market Analysis(stats.mom.gov.sg, 2014)There has been a steady decline in Singapores unemployment rate from 3.4 percent in 2004 to 1.9 percent in 2013 with the exception of the jump in unemployment from 2008 2009 as a consequence of the global recession. Because of Singapores dependence on external markets, she is prone to repercussions of the global markets and consequently, the global recession impacted unemployment rates heavily, resulting in cyclical unemployment. Aside of that, Singapore has one of the highest employment rates worldwide.The other form of unemployment faced by Singapore is structural unemployment. Keeping pace with Singapores rapidly developing economy is her shift from a labour intensive economy to one that is capital intensive. This is inevitably met with the challenge of imperfect substitution of skills in Singapores labour force. For example, with Singapores recent move into the biomedical and R&D (Research and Development) industries, workers who are only able to work in the lower end manufacturing industries may find themselves unemployed as mass production work is outsourced to other developing economies. To address this issue, the Singapore government has invested heavily in education and training, with nearly one in four (23%) citizens employed in 2010 degree holders, thus allowing her citizens to keep relevant and remain competitive (stats.mom.gov.sg, 2014).

Price Level Analysis

Singapores inflation rate averaged at 2.7 percent per year over the past 10 years.As evidenced in the diagram above charting Singapores inflation rate, she experienced a sharp increase in inflation rates for the 2008 period. This was chiefly caused by a hike in GST (Goods & Services Tax) imposed by the Singapore government. To help Singaporeans manage the impact of the hike, the Singapore government provided citizens with substantial offsets, assuaging its effects on most families (news.asiaone.com, 2014).

ConclusionWith consideration of the challenges presented to Singapores economy, it has to be said she has performed commendably over the 2004-2013 time period discussed. Yet, following the watershed 2011 general election, the Singapore government has significantly altered its economic approach and we can certainly expect to see the consequences of it in the near future. Measures have been put in place to ensure the cooling down of the property market which will invariably affect inflation rates as well as tighter foreign labour policies that will influence the labour market will manifest their impact on Singapores economy as they come full circle. Still, Singapore has come this far from its fledging economy since independence and I have faith she will continue to rise up to and above - the challenges ahead.