Does Singapore have the mettle to survive tough times ahead?

The Straits Times

01 January 2017

Han Fook Kwang

If you thought 2016 was a difficult year, don’t hold your breath for things to get better this year. The consensus among many, going by the latest business survey, is that it will get even tougher.

Economists forecast the Singapore economy to grow by 1-3 per cent this year, after growing by less than 1.5 per cent in 2016.

This means another year of slow growth – that’s new territory for Singapore which it has never been before. In previous years, when the economy was depressed, it almost always bounced back, sometimes spectacularly, the next year or, at the most, the following. It has never experienced more than two years of sluggish growth. Even more worrying is that no one can say when the turnaround might happen.

You may think it is to be expected that growth will slow down when an economy matures, as it has for many of the advanced countries, including Japan, South Korea and most of Western Europe.

But that’s dangerous thinking because the Singapore economy isn’t as developed as these other countries. It does not have the same level of manufacturing or engineering capabilities, or have comparable number of home- grown world-class companies. It doesn’t even have a single Nobel Prize laureate. The depth of talent and experience isn’t there across the economy.

If indeed low growth is the new reality, the slowdown is happening much too prematurely here.

There is another reason why slow growth cannot be the new normal, not yet anyway: Singapore is a city state and cities are expected to grow at higher rates than countries with vast rural areas, or they will not be able to attract the talent and resources necessary to sustain vitality.

…The writer is also a Senior Fellow at the S. Rajaratnam School of International Studies, Nanyang Technological University

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