STATE OF THE ECONOMY
Singapore’s economy is forecast to grow by 1.4 percent this 12 months.
With the exception of tourism and related industries, the remaining sectors of the economy usually are not performing well. Manufacturing, finance and insurance, construction, wholesale and retail are showing weak growth. The country’s non-oil exports actually declined in comparison with last 12 months. Fortunately, the unemployment rate stays very low at 2.1%.
In light of those facts, it just isn’t surprising that the Business Confidence Index is within the red.
WORST IN CLASS?
Is Singapore’s economy the worst performing economy in Asia?
Singapore’s gross domestic product (GDP) last 12 months was $72,711, the very best in Asia. Singapore’s performance mustn’t be compared with that of low- and middle-income countries because they’re at different stages of economic development.
Singapore must be in comparison with other high-income Asian economies, namely Japan, South Korea, Taiwan and Hong Kong. These 4 economies are forecast to grow by 2.4, 2.6, 1.1 and a couple of.1 percent respectively this 12 months. Singapore just isn’t the worst in its class. Taiwan is.
CYCLICAL OR STRUCTURAL PROBLEMS?
Are the issues of the Singapore economy cyclical or structural? I’d argue that these are mainly cyclical in nature, but there could also be some structural issues that we should always consider.
It is well-known that Singapore’s foreign trade is thrice the dimensions of its GDP. We are probably the most trade-dependent economy on the earth. Global trade is weak, which has a really bad impact on our economy.
Moreover, aside from India and Asia, all other major trading partners similar to China, the United States, Europe and Japan are experiencing suboptimal growth.
Another factor that influenced us is the deteriorated economic situation within the oil and gas industry.
However, a few of our insightful economists have identified that there are some structural problems. They point to high costs, restrictive labor policies and decision-makers’ reluctance to take risks as three problems.
They indicate that many small and medium-sized enterprises are squeezed by high rents on the one hand and the dearth of opportunities to employ more foreign staff on the opposite.
Some of my friends decided to shut their businesses. They told me they couldn’t withstand the constant pressure of rising rents. The invention of the true estate investment trust (Reit) is a boon for investors but a bane for renters.
An Irish friend who has lived in Singapore for over thirty years recently warned me that Singapore was in peril of becoming a rentier society.
PESIMISM OR OPTIMISM?
Should we be optimistic or pessimistic concerning the way forward for Singapore’s economy? I’m optimistic for the next reasons:
- Singapore has a corruption-free business environment and the rule of law is powerful.
- We have world-class infrastructure and good connectivity.
- It’s easy to do business here and we enjoy industrial peace.
- We have qualified and hard-working staff.
- We have a critical mass of interconnected activities across our financial and regional business centers.
- We have an IT-savvy population and our goal is to remodel Singapore into a wise country.
- We have a culture of accepting change and using technology, including breakthrough technologies.
HUMAN RESOURCES DEVELOPMENT
In our recent world, a rustic’s most significant asset is its people. Brain power is more necessary than muscle strength. Knowledge-based industries represent the long run. Innovation, creativity and productivity are the brand new engines of growth.
Singapore does a superb job educating and training its youth. Primary 4 and Secondary 2 students in Singapore got here first in mathematics and science within the Trends in International Mathematics and Science Study 2015 organized by the International Association for the Assessment of Educational Achievement.
In the OECD’s Pisa 2015 study conducted in 72 countries, 15-year-old Singaporean students also topped the rankings in mathematics, science and reading.
Finally, the National University of Singapore and Nanyang Technological University were ranked first and second, respectively, within the 2016 Times Higher Education’s Best Universities in Asia rating.
INTERNATIONAL CONFIRMATION
There are two highly respected Swiss institutions, the World Economic Forum (WEF) and the Institute for Management Development (IMD), that publish an annual index rating the world’s countries by economic competitiveness.
In the WEF Global Competitiveness Index (2016-2017), Singapore ranks 2nd, after Switzerland. In the 2016 IMD Global Competitiveness Scoreboard, Singapore ranks 4th, after Hong Kong, Switzerland and the United States.
I’m confident that after the worldwide economy recovers and global trade recovers, Singapore’s economy will see a lift.
Singapore is investing properly in education and skills training. Led by the Commission on the Future Economy, we’re preparing to reinvent ourselves to seize the brand new opportunities of the digital economy, disruptive technologies and rather more.
Singapore is fortunate to be situated between three of the best growth countries in human history, namely China, India and Asian countries.
We will share in these growth stories.
In my opinion, Singapore has a really vibrant future.
By Tommy Koh
- The writer is a special advisor to the Institute of Policy Studies at NUS
