Oh joy, our economy’s bubbling again, says our nation-building press


Few things annoy me as much as when our nation-building press gets carried away. Today’s front page of the Straits Times has a headline “Singapore posts surprise Q1 growth”, leading a story that speaks — as breathlessly as a teenage groupie — of “good news”.

It quotes unnamed economists saying that “the numbers point to the resilience of the Singapore economy”.

Then it gives the Star Award to the financial services sector, reporting — wrongly — that it grew “about 51 per cent over the previous quarter”, before discussing other sectors such as construction and manufacturing. Of the latter, it reported that it “contracted 4.7 per cent over the year.” Wrong again. It actually contracted by 10.4 percent when measured at current prices, and contracted 6.8 percent when measured in constant 2005 dollars. These are Greek-style plunges.

As for the “surprise” in the headline,  it was only a surprise in view of the flash estimate made in early April of a 0.6 percent contraction. Nonetheless, it was excuse enough for the newspaper to megaphone its cheeriness, almost ignoring the fact that the economy as a whole showed only an anaemic 0.2 percent growth (yes, zero point two) over the first quarter of last year.

Overall, the newspaper tries to say that while there were bright sectors and dimmer ones, on balance, things are looking up. It took me no more than five minutes looking at the source data to see how slanted the news story is.

Let me explain.

If we want to talk honestly about how different sectors performed and contributed (or detracted from) the overall economic picture, we should take care to mention which are the important sectors, and which are not. Singapore’s statistics has about eleven significant sectors, of which the three biggest constitute 50 percent of our economy, value-wise. These three are:

  • manufacturing, contributing about 19.5 percent,
  • wholesale and retail trade, about 16 percent, and
  • business services, about 14.5 percent.

Financial and insurance services is in fourth place, contributing about 11 percent by value.

In the table below, I provide the data by sector, with the sectors listed in descending order, value-wise.


You will notice immediately that the biggest and second-biggest sectors registered declines in the first quarter of 2013. This is worrying, especially when these two are also big generators of employment. Manufacturing provides employment for 14 percent of Singapore citizens and permanent residents in the labour force (“the resident labour force”); it is the second largest employment sector. Wholesale and Retail Trades provide employment for 15 percent of the resident labour force — the largest employment sector.

By contrast, the “star sector”, Finance and Insurance Services, is not only much smaller value-wise, it provides employment for only 7.4 percent of the resident labour force.

It would be much more responsible of a newspaper to ensure that its reporting of data is framed this way.

And what of the statement in the Straits Times, that financial services grew “about 51 per cent over the previous quarter”? It is probably taken from the press release by the Ministry of Trade and Industry (23 May 2013), which said “On a quarter-on-quarter basis, the sector surged by an annualised rate of 50.6 per cent.” The key words are “annualised rate”. Straits Times omitted them. If you look at the second paragraph of the ministry’s statement, it also mentions “seasonally-adjusted annualised basis” — which tells us that it is quite a different beast from blithely suggesting that this sector was 51 percent bigger in the first quarter of 2013 compared to the fourth quarter of 2012.

An emerging pattern from the data adds to my concern. Real estate (including construction) and finance are the growing sectors, but those sectors which we generally think of as the “real economy” — manufacturing, commerce — remain weak. It seems to suggest that our economy is being hollowed out and skewed towards asset trading and speculation.

The Ministry of Trade and Industry itself says, if you can parse the suspiciously opaque language, the expansion in the Finance and Insurance sector “was underpinned by robust growth in the sentiment-sensitive segment and the financial intermediation cluster amidst signs of stabilisation in the external environment.”

What on earth is the “sentiment-sensitive segment”? Do they mean stock market speculation?

And what is “financial intermediation”? Do they mean commission-taking and rent-seeking?

I am reminded of what happened to Britain post-2008 financial crisis. It fell into recession and has been barely afloat since. London in the years prior to the 2008 meltdown had been a high-flyer in international finance, but few people noticed how the UK’s manufacturing and trading sectors were declining. After the financial crisis swept in, the country struggled to recover, but its other industries do not have the strength and the export-prowess to pull the country up.

Stodgy Germany, that kept its focus on engineering and innovation, is the exact opposite example.

Is Singapore going down the same path as Britain? Should we be worried?

I have one question which I cannot answer. I hope more informed readers can help. Why is the gap between the year-on-year growth between 2005 prices and current prices so big in two sectors (“Ownership of dwellings” and “Utilities”)?  Has inflation anything to do with it?

16 Responses to “Oh joy, our economy’s bubbling again, says our nation-building press”

  1. 1 RTL 24 May 2013 at 22:13

    Just my deduction from the difference in gaps between market and 2005 prices for the various industries, in particular the massive gap for ownership of dwellings.

    Simplistically, say in 2005, each house cost $100 and there were 50 houses owned => total ownership of dwelling is $5,000. Today, each house costs $200 and there are 55 houses => total ownership of dwelling is $11,000.

    Growth in the sector at market prices would be 120% while the growth at 2005 prices would simply be 10%.

  2. 2 Lye Khuen Way 25 May 2013 at 09:45

    Yes, the Headlines proclamation by ST was a surprise alright!
    Thanks for pointing out those missing, crucial words, like “annualized” that our beloved ST omitted from the Authority Report.

    Worrisome, is an understatement!

    But really, what can our “coverment” do ?
    Having pushed ourselves as a Financial Hub and used cheap foreign labour and the two Gaming complexes and the F1 to boost the GDP, can they pull any more rabbits from that bag of tricks ?

    • 3 Muzzar Ar Sharif 30 May 2013 at 20:09

      Yes, they propose to import a million foreigners. Don’t know if that qualifies as a plan or just a desperate last throw of the dice before they lose the next election.

  3. 4 Ang Teck Huat 25 May 2013 at 11:03

    To borrow Khaw Boon Wan’s words:
    “This is self-righteous, and – pardon me for saying so – arrogant. Many of us in this House have been serving Singaporeans for decades, long before she entered this House. Please, don’t behave as if you are the only patriot in this House.”

  4. 5 JG 25 May 2013 at 15:54

    Alex, blog posts like yours will “erode trust in public institutions”!!

  5. 7 doulosyap 25 May 2013 at 16:11

    Funnily enough, Wall Street (the new one) was screened on Ch5 last night.

  6. 8 ah loong 25 May 2013 at 18:39

    alex why don’t like straits times, so many nice big pictures and little news. enjoy it before it goes out of business…

  7. 9 JW 25 May 2013 at 19:28

    Ok hmmm – I did a quick look at seasonally adjusted annual rates on the interwebs and it appears to be a legit measure where the season of the year is factored into calculations – for example ski resorts in winter make more money than spring. Of course the means by which it is adjusted is questionable, but on the whole as a methodology im not sure it isn’t the correct path, unless someone else has a different explanation for the term.

    But I agree with Alex that their doublespeak seems to hide speculation and rent-seeking as the source of income, and also agree that commerce and retain or innovation or some other productive outcome (rather than paper and number shuffling) should be the cornerstone of our economy. But the truth is we can’t compete on raw resources and manufacturing – labour costs are simply to low in India and China. We have to develop science, technology or cultural commerce – trade on our brains, if you will, or Singapore is in for a nasty turn. And none of these creative sectors are going to see any real development until the Govt changes its willingness to let go of control.

  8. 10 david 25 May 2013 at 19:57

    For all I know, this article could be written by someone with the name Janadas. Please check the author in the MS Word file. Government propaganda as usual.

  9. 11 Al Tan 26 May 2013 at 00:23

    Regarding your question about the gap between the year-on-year growth between 2005 prices and current prices in two sectors (“Ownership of dwellings” and “Utilities”). Has inflation anything to do with it? Yes, it appears so.

    If you look at page 43 in the full report of Econ Survey of Singapore 1Q 2013, it shows the GDP deflators. For ownership of dwellings, it was at 248.5 for 1Q 2013. That means prices at 1Q 2013 are 2.485x those in 2005 (2005 = 100). The GDP deflator for 1Q 2012 was lower at 234.9.

    That means between 1Q and 2012 and 2013, prices for that particular industry increased. When expressed in 2005 prices, ownership of dwellings rose only 0.4% comparing 1Q 2013 and 1Q2012. But “current prices” include the inflation since 2005, so the percentage increase in ownership of dwellings over the same comparison period is much bigger at 6.2%.

    You are right in saying that we shouldn’t just look at selected numbers and make a story out of it. We have to look at the fuller picture. But it seems the ST wasn’t the only one to harp on the 50.6% growth for the finance in insurance industry. Reuters and CNA both called it quarterly growth, when it was really annualised QoQ growth.

    I don’t think many reporters have a basic grasp of economics. And far fewer of them know what annualised really means and what it takes to get a fuller picture of the economy and to present that picture to the general audience.

  10. 12 Andrew 26 May 2013 at 05:15

    To lye khuen way

    Yes you can….by doing more of the same. Opening up 2more casinos, that is.

  11. 13 Paul Ho 26 May 2013 at 12:58

    JG, trust must be earned and stand up to scrutiny.

  12. 14 Josh 26 May 2013 at 15:08

    Financial sector eh? Must be all that money laundering.

    Perhaps that ‘Swiss standard of living’ prophecy has been partially fulfilled after all. It’s really a Swiss standard of *banking*… for all the dirty money from dubious sources to be parked here.

  13. 15 Furt27 29 May 2013 at 15:10

    “These are Greek-style plunges”: you mean Hellenic-Republic plunges 🙂

  14. 16 merecat 30 May 2013 at 06:30

    The only measure the pap has used to judge success over the past 60 years has been money as measured by economic growth. But now Singapore’s ‘Tiger Economy’ isn’t growing anymore which is an embarrassment for the pap since without economic growth it is not clear why they are in office.

    That is why, in desperation, they have come up with a crazy idea to increase the population yet more by importing foreigners. That might increase growth but will also make Singaporeans strangers in their own land and push the country closer to the ecological tipping point.

    Time for a change.

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