PART I

Percent growth in real GDP

(%)
RGDP t RGDP t-1
RGDP t-1
Time
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

New Zealand
0
-1.06
1.97
0.50
0.22
-1.61
1.05
6.40
5.41
4.41
3.48
3.26
1.22
5.31
2.29
3.62
5.02
4.09
3.55
3.23
1.87
3.54
-1.87
2.21
0.65
2.33
2.53
2.50

X 100%
Singapor
e
0
10.76
11.12
10.18
10.04
6.69
7.09
11.54
10.93
7.03
7.53
8.29
-2.23
6.10
8.90
-0.95
4.21
4.44
9.55
7.49
8.86
9.11
1.79
-0.60
15.24
6.06
2.50
3.85

Time
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Inflation Rate (%)

CPI t CPI t1
X 100%
CPI t-1
Singapor
New Zealand
e
0
0
15.74
0.52
6.38
1.52
5.72
2.35
6.10
3.46
2.60
3.43
1.02
2.26
1.29
2.29
1.68
3.10
3.76
1.72
2.29
1.38
1.19
2.00
1.24
-0.27
0.28
0.02
3.01
1.36
2.51
1.00
2.66
-0.39
1.12
0.51
2.29
1.66
3.04
0.43
3.37
1.02
2.38
2.10
3.96
6.52
2.12
0.60
2.30
2.80
4.43
5.25
0.88
4.53
1.30
2.39

Percent Growth In Real GDP (%)

20

15

10
New zealand
singapore
5

-5

Inflation Rate (%)

18
16
14
12
10
8

New zealand
singapore

6
4
2
0
-2

Gross domestic product (GDP) is the total market value of all final goods and services
produced within a country in a certain period time.it measures total income of everyone in the
economy and the total expenditure on the output of G&S.
New Zealand had an advanced market economy, highly rely on international trade. The
country is closely link with Australia, so is the biggest importer of kiwi products, supplier
and investor. New Zealands most developed industries are focused on tourism and exports of
agricultural products and are the main source of growth. (New Zealand GDP Growth Rate,
2015)
Singapores economy depends heavily on foreign trade, both from port activities and
from exports of electronic components and refined oil. The country is a leading foreign direct
investment recipient due to its status of one of the freest, most competitive and most businessfriendly economies in the world. (Singapore GDP Growth Rate , 2015)
According the New Zealands data, from 1987 to 1992 the GDP average growth is very
low which just 0.15% is, it start to increase obviously in 1993 which is attain 6.40 %. Between
1994 to 1997, the GDP average growth still at high rate which is 4.14%. Between 1998 to
2000, the data presented that the GDP growth is not stable, it would vary very strongly. After
that the 5 years it recovers become stable, the average growth got 3.90%. From 2006 to 2013,
the average growth is considered low which 1.72% is. In 2008, it even falls until -1.87%.
In overall, Singapores growth is higher than New Zealand. From 1987 to 1997, the
average GDP growth is higher until 9.20%. In 1998, the GDP plummeted by 10.52%. Between
1999 to 2009, the average GDP is 5.35% but in 2001 and 2009 the GDP is negative. However,
it managed to recover in 2010 and grew an impressive to 15.24%. After that, GDP grew 4.14%
on average between 2011 and 2013.

Inflation refers to an overall increase in the Consumer Price Index (CPI), which is a
weighted average of prices for different goods. In New Zealand, the inflation rate measures a
broad rise or fall in prices that consumers pay for a standard basket of goods. In 1987, the
inflation rate is considered high which 15.74% is. Between 1988 to 1990, the average inflation
6.06%. However, the average inflation rate falls until 1.88% in 1991 to 1998. In 1999, it
decrease obviously to 0.28% whereas it rocketed by 2.73% to 3.01% in 2000. The following 10
years is considered stable which average rate is 2.57%. New Zealand had a high rate which is
4.43% in 2011. The following two years the inflation rates are 0.88% and 1.30%.
In Singapore, the most important categories in the consumer price index are housing
which is 25% of total weight and food (22 %). The index also includes transport (16%),
education (7%), health (6%), communication (5 %) and clothing and footwear (3%).
Recreation, alcoholic beverages, tobacco and others account for the remaining 16% of total
weight. (Trading economics, 2015)
Singapores inflation rate obviously lower compare with New Zealand which are 0.52%
and 15.72% in year 1987. From 1988 to 1997, the average inflation rate is 2.35%. In 1998 the
inflation rate drop to negative becomes -0.27%. The following year the rate got start slightly
increase until year 2002 drop until negative figure again becomes -0.39%. Besides that,
Singaporeans do generally enjoy fairly low inflation rates, higher costs in transport, housing
and food have caused inflation rates to rise significantly between 2007 and 2010. The average
rate between 2003 to 2007 is 1.14%. It got increase by 4.42% in 2008 but the following year
drop obviously to 0.6%. From 2010 to 2013 the average rate is 3.74%.
There are many factors will impact the GDP growth and inflation rate. Due to Global
Financial Crisis in 2008, so both countries got are impacted. In 2008, Dr Bollard got mention
that Monetary Policy Statement is the main reason influence the New Zealand economic
growth. Inflation pressures in New Zealand remain relatively strong. Higher food and
commodity prices are including to inflation in New Zealand as they have in other countries,
including Australia and China, which have continued tightening monetary policy in recent
months.(The New Zealand economic outlook, 2008)
On the other hand, Singapore is facing a weakening impact of imported inflation owing
to a cyclical slowdown of some of the ASEAN economies, as well as regional economies like
4

China and India. This is mention by Dr. Aurobindo Ghosh. (Singapore Inflation Expectations
Drop as Slowdown Continues in the BRICS Economies, 2013)
PART II
Current Economic Issue Deflation
The Euro Zone Slides Into Deflation: The Good And The Bad
This journal is adapted from The Economist which published on 7 January 2015. The
macroeconomics issue in this journal is deflation. It is discussing about the deflation in euro
zone in good and bad view. This journal has also narrates that the deflation has been caused by
oil-price slump in 2009.
According to public understanding, deflation is a decrease in the general price level of
good and services in the economy. It is usually caused by reduction of money supply and a
drop in aggregate demand. Deflation is the opposite of inflation, it occurs when the inflation
rate falls below 0%. Moreover, it is dread by central bankers around the world as it will
increase the real value of debt. Central banks mostly aim to keep the general price level stables.
In this journal, it said that not all episodes of deflation are the same because deflation
has a bright and dark side, depend upon what it is driving by and how long it will last. (P.W.
2015). The Eurozone has been slides into deflation for months. Furthermore, consumer prices
for the currency areas were lower in December than a year earlier. European Central Bank
should provide assurance to businesses and individuals that the period of deflation will be
short.
In the case of oil-price slump in 2009, it is good for a short break out of deflation in
falling oil-price, because it means a tax cut, and declining prices means is likely to pushing on
consumers purchasing power on other goods and services. In addition, a slump in oil-price
may driven by a big surge in the oil supply. A decline in the oil-price has also fed into some
improvements in living standards.
On the other hand, if deflation persists and businesses come to expect prices to fall,
then it is bad. This situation may lead to decrease in consumers because it makes sense to put
off purchases and pay lower prices at a later time and companies also put off investments.
Besides, a long lasting deflation is a huge issue and may be crippling for the euro zone since
public and private debts are quite high in some parts in the region.

In conclusion, a slump in oil-price is an undoubtedly positive development in euro

zone. Generally, a deflation is not a good thing. (Tim Worstall, 2015). The supply and the
demand in the economy are pushing inflation lower, but demand still not weak enough to cause
outright deflation by itself.
Current Economic Issue Economic Growth
The Twilight Of The Resource Curse
This journal is adapted from The Economist which published on 10 January 2015.
Economic growth is the macroeconomic issue that in this journal. This journal is deliberating
about African economic growth.
As we know, economics growth is an increase in the capacity of an economy to produce
merchandises and services, compared to another period of time. Economic growth can be
measured in nominal terms.
For many years, commodity prices have shaped Africas economic growth. The
continent is home to a third of the planets mineral reserves; a tenth of the oil and it produces
two-thirds of the diamonds. Thus, when the price of natural resources and export crops is high,
growth has been good; when the price fall, so has the continents economy.
Over the past ten or more years, Africa has the name of worlds fastest-growing
continents; its average annual rate was more than 5%. However, in previous years, African
economies have crashed due to the prices of oil, minerals and other merchandises have fallen.
There was a case happens in 1998-1999, Nigerias naira lost 80% of its value because of the
oil-price fall. African moneys again took a beating during a period of turmoil in commodity
markets in 2009.
Beside, economies large drops in commodity prices have the capable of to affect
currency falls. In year 2014, there are at least 10% or more than 10% African currencies
dropped. Currency of Ghana was the continents worst performing currency in 2014, dropped
by 26% against the dollar. But it falls not because of the investors worry about the commodity
prices will be fallen. In face, Ghana will not depend on commodity especially in African
standards. Not only this, it has run a lax fiscal policy recent years and the deficit hit 10% of
GDP. After two decades of poor performance, Africas total investment as a percentage of GDP
increased after 2000. Foreign direct investment (FDI) into Africa rose by 5% in 2012 and 10%
in 2013, despite global stagnation.

In conclusion, Africas economic growing up or down depend on the prices of oil,

minerals and other merchandises. Other than that, economic growth also will affect currency.
For instance, African currencies dropped due to the economies have crashed.

Current Economic Issue Unemployment

Writing off Unemployment
This journal is adapted from The New York Times which published on 9 February
2014. The macroeconomics issue in this journal is unemployment. It discussed about the long
term unemployment in America and the writer emphasis the likely cause of the long term
unemployment in America is due to the various reasons.
Firstly, the writer pointed out that the cause of long term unemployment in America is
due to the unemployment benefits that was effective on 2008, this benefit cause the
unemployment rate in America to increase rapidly throughout the years. Other than that, the
writer also discussed that sometimes the nonwhite and poor educated is not one of the reasons
that cause the increase in long term unemployment, although poor education is most likely to
be the reason for unemployment but based on the recent research by Urban institutes josh
Mitchell half of the long term unemployed are non-Hispanics whites.
Although college graduates have the least possibility to loss their job, but if they
eventually lost their job they will most likely join the population of long term unemployed.
Lastly, the writer states that unemployment seems to be self-perpetuating in weak job markets
as most of the potential employer tend to be discriminate against jobless. Based on a research
conduct by Rand Ghayad of northeastern university, he found that most of the fictitious resume
he sent out are less likely to replied by the employer if the fictitious applicant had been out of
work for more than six months even though their qualified for the job.
Lastly, the writer also concludes his article by stating that the Americans have been
disregarded due to the rejection of potential employers, and abandoned by the politicians.
Unemployed are individuals who are 16 years or older and not working but available
for work, and has made particular effect to find work during the previous 4 weeks, and
unemployment explains the rate of unemployed by dividing the number of unemployed with
the total labor force. Unemployment occurs when a person who is AGGRESSIVELY searching
for employment is unable to find work and it is often used as a measure of the health of the
7

economy. (Investopedia, n.d). One of the causes of unemployment is welfare payment that was
cause due to the financial aids given by the government. Although they are security measures
for citizens, they are still cause unemployment to some extent. The aids given by government
to the unemployed are actually reducing their willingness to work and this is an indirect
negative impact of extended unemployment benefits because citizens become more dependent
on the benefits they receive. They register for government benefits even if they gave up
looking for jobs, and the incentives they get are enough to fulfill their daily necessities and
they will continue to be unemployed. (Saptakee , 2011).The article also discussed welfare
payment by stating that the unemployment benefits that were effective on 2008 in America
cause the unemployment rate of the country to increase through the years.
Racial discrimination is also one of the causes of unemployment as citizens in
organization or company and society have discrimination on an individual. It's one of the most
serious causes of unemployment as citizens who are not citizens of that particular country
remain unemployed due to discrimination on grounds of race, religion, caste and ethnicity, and
they are experiences. It becomes very difficult to find out a decent job under such
circumstances. (Saptakee, 2011). In the article, the writer also emphasis that unemployment
seems to be self-perpetuating in weak job markets as most of the potential employer tend to be
discriminate against jobless.
The article should have provided more methods on reducing unemployment as there are
some methods to reduce unemployment. Firstly, the government could set stricter rule in order
to request for unemployment benefits so unemployed citizens will put more effort to get a job
in order to gain their daily necessaries. Governments could take a more pro-active role in
making the unemployed accept a job or risk losing benefits. This could help reduce
unemployment. But, it also means that the government will end up employing thousands of
people in un-productive tasks which is very expensive. (Tejvan, 2011).
Other than that, government should provide more free education and training program
for the unemployed and employed as this could help the unemployed citizen to get a job easily
by gaining more skills and knowledge about a specific job and could help the employed
citizens to improve their performance so they would not lose their job if not it could cause the
unemployment to increase. The objective is to give the long term unemployed new skills which
enable them to find jobs in developing industries, e.g. retrain unemployed steel workers to have
basic I.T. skills which helps them find work in service sector even though the unemployed may
8

be unable or unwilling to learn new skills. . (Tejvan, 2011). In conclusion, there are numerous
amount of crisis that could cause unemployment and methods to reduce it.

Current Economic Issue Monetary Policy

Statement on Monetary Policy
This journal is talk about the Statement on Monetary Policy which published by Bank
of Japan on February 18, 2015. It is talking about the monetary policy held by Japan in year
2015.
From the statement we see that Bank if Japan will conduct money market operation to
increase monetary base at an annual pace about 80 trillion yen. Then, central bank also will
purchase Japanese government bonds (JGBs), exchange-traded funds (ETFs) and Japan real
estate investment trusts (J-REITs) to increase the outstanding amount at an annual pace and
view to a reduce in interest rates across the entire yield curve. Next, the bank will also maintain
the outstanding amount of CP and corporate bonds.
Besides that, Japan's economy has continued its moderate recovery trend. Central bank
will picking up exports due to the overseas economic have been recovering. And total effect the
improvement of employment and income situation. As Japan's economy is expected to continue
its moderate recovery trend. Lastly, the bank will continue using quantitative and qualitative
monetary easing (QQE) and aiming to achieve the price stability target of 2 percent.
Monetary policy is economic policy that run by the central bank, it is the behavior of
central bank concerning the nations money supply. From this article we see that the central
bank is using expansionary monetary policy and also QQE. Expansionary monetary policy is
used to increase money supply and deposit monetary and decrease reserve fund, by open
market operation and decrease required reserve ratio and discount rate. Due to this policy,
interest rate and investment cost will decrease, so I will stimulate investment activity and
increase the aggregate demand (AD).
In the statement we can see that, Bank of Japan is purchasing JGBs to increase the
money supply. And they increasing their AD by increase investment by export, business fixed
investment, public and housing investment and also private consumption.

As conclusion, there are some risk in developments in the emerging and commodityexporting economies due to the debts issue and the risk of low inflation rates being lasting in
Europe. If they can handle the risk, it might a good economy year in Japan.

Current Economic Issue Fiscal Policy

China Fiscal Policy To Help Avoid Sharp Slowdown: Finance Minister.
According to the article from The Economic Times on March 6, 2015, it is talking
about that Chinas Finance minister Lou Ji Wei say that China must implement an
expansionary fiscal policy to help avoid a sharp slowdown in economy.
As we know that, fiscal policy which used by government to affect economic, so it also
as government spending and taxing policies. Normally, there are 3 categories for the policies
concerning, they are government purchases Goods & Services, taxes and transfer payment.
Besides that, there is 2 type of fiscal policy. First is discretionary fiscal policy, it means
that the changes in taxes or spending is refer from government policy. It separate into 2 type of
policies which is expansionary fiscal policy which used when there is an economic depression
and contractionary fiscal policy which used when there is an economic overheat. Then is
automatic stabilizers it means that the revenue and expenditure items in the federal budget will
automatically change with the state of economy and tend to stabilize GDP.
According to the article, China government has raised the budget deficit to $258.61
billion, or around 2.3% of GDP which increase 0.2% compared with last year. But the actual
budget deficit would be around 2.7% of GDP this year after incorporating government budget
calculation reforms in this year. On the other hand, China is still struggling to deal with a
mountain of local government debt which amount at least of $3 trillion. So, the local
government will repay more than $15.97 billion in debts this year.
Deficit budget is known as a budget policy which when assumed spending is more than
assumed income and when it is occur, government need to sell debentures to cover the income.
In this article we know that China is running expansionary fiscal policy, so the government
may reduce the tax. Then, local government also increase their spending by increased 0.6% of
deficit budget from GDP and also repay more than $15.97 billion debt to avoid a bad cycling of
debts on debts.

10

As a conclusion, China hope to stimulate economic activity through the fiscal policy
that they are made. But on the moment, they also need to face the difficult from Time Lag and
Crowing Put problem.

References
New Zealand GDP Growth Rate (n.d.). Retrieved 1 March, 2015, from Trading Economics:
http://www.tradingeconomics.com/new-zealand/gdp-growth
Singapore Economy (March 18, 2010). Retrieved 1 March, 2015, from Economy Watch:
http://www.economywatch.com/world_economy/singapore/?page=full
Tim Worstall (31 March, 2015). It's Not The Oil Price That Is Causing Deflation In The
Eurozone. Retrieved 8 March, 2015, from Forbes:
www.forbes.com/sites/timworstall/2015/01/31/its-not-the-oil-price-that-is-causing-deflation-inthe-eurozone/
Jack Ewing (30 January, 2015). Fall in Eurozone Prices Inflames Fears of Deflation. Retrived 8
March, 2015, from The New Yorks Times:
http://www.nytimes.com/2015/01/31/business/eurozone-inflation-unemployment.html
Investopedia. (n.d). Unemployment. Retrieved 5 March, 2015, from
http://www.investopedia.com/terms/u/unemployment.asp
Saptakee, S. (2011). Causes of Unemployment. Retrieved 5 March, 2015, from Buzlze:
http://www.buzzle.com/articles/causes-of-unemployment.html
Tejvan, P. (2011). Policies for Reducing Unemployment. Retrieved 5 March, 2015, from
Economics Help:
http://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/
Case, K.E., Fair, R.C. & Oster, S.M. (2014), Principles of Economics. (11thed.). Upper Saddle
River, NJ: Pearson/ Prentice Hall

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