S'pore: Consumer spending not central to economy

lotus999 SG

Felt rather sad after reading this article in singaland.blogspot.com:

Malaysiakini
S'pore: Consumer spending not central to economy
Robert Schwatrz
Aug 24, 05 11:30am

Writing about Singapore's economic outlook is boring. It's not that there is nothing to say, it's that there is nothing to say about Singapore itself.

In 2001, the trade and industry ministry published a paper that looked at the four primary long- term drivers of Singapore's economy. The number one influence was growth in the United States.

Number two? Growth in the economies of Indonesia and Malaysia. Third was global semiconductor sales. And rounding out the top four was domestic construction.

But wait, you might say, what about Singaporeans' love of shopping? Certainly that has to count for something? You're right it does.

The problem is that Singaporeans love of shopping is usually done someplace other than in Singapore. The fastest growing component of private consumption over the past decade or so has been Resident Expenditure Abroad.

Of the spending done in Singapore, the fastest growing type of retailer (by far) has been motor vehicle dealers. From 1997 to the third quarter of last year, dealership sales had increased by a total of nearly 260 percent, not including the effects of inflation.

The next fastest growing category was supermarkets, which grew by a total of nearly 32 percent. Overall, non-motor vehicle retail turnover grew, excluding inflation, by a total of 7.1 percent from 1997 through September 2004.

The key to Singapore's retail sector is not the average Singaporean. The key to retail in Singapore is the overseas visitor. If you want to get a handle on how well the sector is doing, look at the growth in visitor numbers. These have traditionally led the retail numbers.

No political voice

So again, where does this leave the people of Singapore? In their government housing units voting for the PAP every so often and that's about it. As far as making the economy move forward, the average Singaporean is a non-event. And as such, he or she has little say in the political environment. No economic clout =no political constituency = no audible political voice.

The consumer's share of Singapore's economy is around 42 percent. This compares to about 55 percent in Japan, a country notorious for saving, and close to 70 percent in the US. It is not coincidental that the average American, who is such a vital part of the US economy, has such a central role in the political sphere.

In fact, the average consumer in the US has more power over the direction of the Singapore economy than does the average Singaporean. It is the continually increased spending on ever more gadget-filled electronics equipment or on a new lifestyle drug done by a typical American that drives the sales which drive Singapore's production.

To be fair to the government, it knows that any money spent on boosting the consumption of average Singaporeans is money that will very quickly find its way to foreign shores. As such, the PAP has decided that it would prefer not to spend its hard-earned tax revenues boosting the local economies of Batam, Johor or Bangkok.

This is also why the government's interest in the domestic consumer economy is limited to construction. This is a section of the economy that can't be taken out of the country.

siginah SG

No reaons to be sad.

Linking political clout to rampant consumerism is a novel but dumb idea, and misses some very basic concepts in economics.

iveco SG

In the first place, even if we boost consumer spending the money will be spent more likely on imports than locally-produced goods.

robertteh SG

I thought among our scholars there are some very well trained ones who understand about economics.

If they do and have the guts to present differing and fresh perspectives to our aging leaders, they should start telling them to let monies go around as many times as possible - not from citizens into pockets of government but among the citizens many many times so that the whole economy will prosper from such money-go-round-and-round vibrancy.

Now the government is like a black hole sucking every dollar straigbt into their own surpluses so how can the economy ever grow.

Economists, please do your works to make Singapore economy grow once more!!!

siginah SG

As one trained in economics, I'm afraid you are mistaken. Economists can analyse things, but I am not too sure if such work would help the economy grow by any meanginful measure.

I would think that growth comes from people doing the hands-on work of making and selling things as well as from the delivery of services.

If we had to depend on economists to make the economy grow, we'd be in big trouble.

regards,
siginah

Atobe SG

Originally posted by siginah:
As one trained in economics, I'm afraid you are mistaken. Economists can analyse things, but I am not too sure if such work would help the economy grow by any meanginful measure.

I would think that growth comes from people doing the hands-on work of making and selling things as well as from the delivery of services.

If we had to depend on economists to make the economy grow, we'd be in big trouble.

regards,
siginah

Do the work of Economists only stop at analysis only, or do they not help and contribute to the planning of grand strategies to get the wheels of the economy to turn ?

While it is true "that growth comes from people doing the hands-on work of making and selling things, as well as from the delivery of services" - where would the money be coming from, if the goods are made and services offered but there are no buyers, as all the money is sucked up by the Government, its related Agencies and Enterprises ?

'robbertteh' is not wrong in his piece posted that the 'black hole' of the Government has sucked up the money from the citizens, and accumulated into the various treasuries of the Government, its related Agencies and Enterprises, with little left in the private economy that can act as a catalyst to generate and continue the momentum of economic activities.

We do not imagine that 'Economists' are 'supermen' and it will be foolish to depend on 'Economist' to come up with grand plans alone, and expect the plan to work by itself.

The Economist analysis from which Master Economic Plans are made, will require common sense and Human Ingenuity to implement, change and adapt to the economic circumstances that are encountered.

robertteh SG

Singapore's economy has been going downhill since the 1980s. Just recall what the government has done during the recessions of 1990s - constantly denying problems and pushing them away to external forces beyond their control. They tried to give a lot of excuses and even put the blame on the workers except themselves.

If our leaders are some leaders of nation, people might just understand and try to go along with what they say. But our leaders have been constantly claiming their talents and leadership and have paid themselves the world's highest wages.

So naturally people are asking them to be responsible and to deliver. If they are no economists they are still responsible and should know how to manage the macro- and micro- aspects of the economy. If they cannot trust the economists, then they should employ the right people with implementation abilities and not all the conceptual academicians to run the country.