Wednesday, August 04, 2004

Restructuring: Too early for self-congratulation 

Excerpt from the article “Restructuring works, says upbeat DPM” in The Straits Times today:

Economic restructuring is working and Singapore is now better positioned to face the future than many others because it was willing to take bitter medicine, Deputy Prime Minister Lee Hsien Loong said yesterday.

The strong rebound is not simply because of an improvement in external conditions or the result of Singapore being “carried by the rising tide”, he said at a National Day observance ceremony.

“We are doing well because over the past few years, we took bitter medicine. We cut direct taxes, retuned the CPF, changed our GST and pushed for wage restructuring in a big way. We restructured our economy and it is working.”

Nice bit of self-congratulation. But I think it is a little premature.

The fact is, Singapore’s economy is being carried by the rising tide of global economic recovery. Whether Singapore would have done as well without economic restructuring is a question that requires more time to answer.

The reality is that unemployment remains at 4.5 percent, with economists not expecting it to drop much below 4 percent by year-end. And remember that most economists expect Singapore’s economy to slow down next year, so 4 percent may be about as good as it gets for the foreseeable future.

So DPM Lee still has a lot to work on when he takes over as prime minister later this month.


I'm always leary of politicians when they say something like that but its expected.

I'm curious, what is considered to be a "normal" rate of unemployment in Signapore? In the US we're generally happy if its below 5%.

Singapore's unemployment rate was as low as 1.7% at one point in 1997. It took off after the Asian Financial Crisis and has not looked back since.

Bear in mind when looking at Singapore's unemployment figures that we have very little unemployment benefits here. So a rate that's comfortable in the US would be very painful here.


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