The headline figure is no doubt stunning: Singapore’s Gross Domestic Product for the first half of 2010 was 17.9 percent higher than the corresponding period of the previous year. This was strongly flagged in the prime minister’s National Day message issued Sunday night.
I looked hard for some mention of another significant figure in his speech, but it was nowhere to be found: that 2009’s first half GDP was -5.3 percent (yes, minus 5.3) below the corresponding period of 2008. (Source: http://www.singstat.gov.sg/stats/themes/economy/ess/essa11.pdf) To me, it is an important qualifier to the headline figure, helping the listener better grasp the significance of it. The prime minister probably didn’t think it was important, omitting it.
Taken together, what it means is that first half GDP for 2010 was 11.6 percent above first half GDP of two years earlier (2008) before the great recession hit. Averaging for the two years, it means Singapore’s economy grew by 5.8 percent annually. This is very respectable, considering a recession blew into us in the interim, but it is a lot more sober than just trumpetting 17.9 percent. I would also note that these were based on 2005 market prices, in other words, the figures have been adjusted for inflation.
Then we should also ask this: what inputs in capital and people have been injected between mid 2008 and mid 2010 to deliver that 5.8 percent averaged growth in GDP? Just because GDP increased does not mean we are each richer. Having more people to make the economy also means having more people to share it. Unfortunately, at this point, I cannot yet see data about investment and population increase to mid 2010. All I can see is that between June 2008 and June 2009, Total Population increased 3.1 percent, and Resident Population (i.e. citizens + permanent residents) increased 2.5 percent. (Source: http://www.singstat.gov.sg/pubn/reference/mdsjul10.pdf).
Lastly, what portion of that economy belongs to foreigners? Once again, up-to-date details are missing. But data for years prior will indicate that about 40 percent of our economy are attributable to resident foreigners and foreign companies operating here — second line of the table below:
(Source: http://www.singstat.gov.sg/pubn/reference/yos10/statsT-income.pdf, Table 5.1)
In compensation, the above tables also show what Singaporeans (i.e. citizens + permanent residents) received from abroad, in the line “Net factor receipts of Singaporeans from rest of the world”, though I have a faint suspicion that a big part of those figures refer to the earnings of our sovereign wealth funds from the way they free-fell 23.6 and 19.5 percent in 2008 and 2009 respectively. The earnings of our sovereign wealth funds don’t exactly go into any individual’s pockets.
Note too that the numbers in those tables are at Current Market Prices, meaning they have not been adjusted for inflation. Generally this means the percentage increase from year to year tends to be slightly exaggerated, since inflation is more often positive than negative.
With that in mind, look at the line “Per Capita Indigenous GDP” in the green portion of the table. It was S$35,597 in 2005 and S$40,764 in 2009, an increase of 14.5 percent. Averaged over 4 years, it represents a Per Capita increase of 2.9 percent per year before inflation.
You may argue that 2009 was a bad year to choose, because it was in the middle of a big recession. Perhaps we should wait for 2010 figures, though someone else might then argue that it too would be a bad year to choose because it would be unusually good due to a bounceback effect. . . All it shows is that when we assess our economic condition, no one figure is sufficient. We have to look at a whole range of measures, and understand exactly what it is that each measures.
So take the 17.9 percent you’re hearing this week with salt.