Credit: Chris Kuan
“Okay folks, please repeat after me. Yes especially you too – who voted for the PAP to bring back the excellent prospects and income growth of the LKY years.
“2-3% is good economic growth, 2-3% is good economic growth, 2-3% is good economic growth.”
Am not joking here. A lot of Singaporeans have not understood the radical change in fundamentals in the last 2-3 years and are holding onto the fantasy that Singapore has a god given right to be forever like a spring chicken growing 6-7%.
The new normal is 3%. The PM reiterated it yesterday – Singapore will have done well if we grow by 2-3%. This is our long run potential, not disimilar to the long run growt potential of the advanced economies of the west. The big difference is they have a much bigger drag from high taxes but have much greater redistribution while we supposedly have the advantage of low taxes but suffers from low social spending.The Committee on the Future Economy (CFE) report will only tell us how to meet the long run potential not grow out of it.
We should be expecting lower economic prospects and income growth in comparison and can not expect real estate prices to give a boost to household wealth. The economy may spurt to 4% but equally slow growth of 1-2% and even recessions will be more frequent. One of the fundamental tenets of LHL’s Growth Maximisation: to create lots of jobs, does not matter what kind, as a means to alleviate economic hardship for Singaporeans in lieu of greater redistribution and a proper social safety net, this is now dead in the water.
Vote for the PAP if you must but imho do not vote for them in the hope of bringing back strong economic growth – this is not going to happen. The PM himself said we are maxed out. There is nothing much left to do than to set the incentives and set the appropriate monetary policy. Instead, from now onwards, the PAP should be judged on its tax and spend policies to generate greater redistribution and build a social safety net. All the more the changed fundamentals says that the economic pie has to be shared more equitably than it ever had been since independence.”