Economics Downturn That Causes Decrease in Demand for Factories Export Trades

Topics: Inflation, Economics, Unemployment Pages: 3 (1106 words) Published: April 8, 2012
Economic Downturn That Causes Decrease In Demand for Factories Export Trades Introduction
An economic downturn will have an adverse impact on many sectors. One of which is the manufacturing sector. Companies seek to reduce manufacturing costs by sourcing for cheaper alternatives. For instance, importing raw materials from cheaper nations will help in cost reduction. As such, demand for local manufacturing and production will decrease. The article "Singapore factory activity shrink for 7th straight month" (2 February, 2012) reflects on this issue. The author, Ms Melissa Tan, give the latest statistics of Singapore's purchasing managers' index (PMI) to be 48.7, where a reading below 50 signifies contractions. On the contrary, the PMI for China, India, Taiwan and Korea have increased significantly. Accordingly, the author mentioned that the reason for the decrease in Singapore’s PMI is due to fewer new export orders. These figures not only places pressure on the manufacturing companies but also on the workers and governments. The following paper aims to explore the issues on how the decrease in demand of local manufacturing affects gross domestic product. Policy recommendations concerning how the government can play a part in helping the economy will also be discussed Singapore's Economic for the year 2012

Singapore’s 2012 economic growth is forecasted to be around 0 percent on the first-quarter and subsequently 3 to 4.8 for the second to fourth quarter of the year. (Ryan Huang, 2011) In contrast with last year, individual sectors such as industry, financial services, manufacturing and hotels/restaurants are expected to grow at a slower pace. (refer to appendix 1.1, graph that shows the decrease in percentage from year 2011 to year 2012 in individual sector). Singapore is a nation that is dependent on export trades and global growth to boost its economy due to a lack of natural resources. However, the recent Europe debt crisis and Thailand's worst flood in...
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