Moving from fast growth to good growth

Moving from fast growth to good growth

SINGAPORE - Much has been made of the pros and cons of an economic slowdown in Singapore.

To some, a dogged pursuit of gross domestic product growth over the decades has placed severe strains on infrastructure and society, and widened the income gap between the richest and the poorest.

This view, widely held in various quarters, has been met with a strong chorus of retort of late warning of the dire consequences of low growth for a small, maturing economy.

Speaking at the 2012 People's Action Party (PAP) conference early this month, Prime Minister Lee Hsien Loong said Singapore is no longer aiming for any "ridiculous high" growth.

While it "used to make 7-8 per cent, some years 10 per cent or even more", slowing to 5 per cent a year over the last decade, "now if you can do 3-4 per cent, I think that's good", he said.

"And as our workforce grows more slowly in future, even 2-3 per cent growth will be considered good growth."

But "don't believe that growth does not matter at all, and that less growth is better", he made clear, citing the downsides: "smaller increments, smaller bonuses, fewer jobs created; harder to do business".

And woe betide us if Singapore sees a prolonged period of low growth - like the projected pace of about 1.5 per cent in 2012, or slower.

Business and consumer confidence would be hit, the economy would lose its dynamism, and the country could well become an "old folks home" with the young leaving for opportunities elsewhere.

So while the government has taken pains to emphasise that Singapore cannot afford to "relax harder" and not continue to "work hard" for economic growth, it has now also signalled that the official long-term sustainable growth target has been lowered to 2-3 per cent a year, from perhaps 3-5 or 4-6 per cent previously.

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