I am amazed at the rapid turnaround of the Singapore economy.
I thought it was decaying when I had been to Singapore in August 2009. My measurement of the economy was based basically on two parameters – (1) the number of taxis waiting to pickup the almost non-existent passengers at taxi stands/taxis cruising around with the lighted “For Hire” blue lights ; and, (2) the moods of the cross-section of folks that I spoke to, which was not even cautiously optimistic. Of course the GDP de-growth story was there in the media for everyone to see – the growth was negative and exports were falling rapidly.
But, when I went there recently, the story was reversed – it was difficult to get a taxi, we had to queue up ; and, the mood amongst the people I know had become optimistic. I also noticed that more jobs were created in Q3, and the unemployment rate was below 2%. The real estate prices are up, and rentals have gone up. It was difficult to get people on the phone – they all seemed to be very busy. I saw a lot of real shoppers at iSETAN, the Japanese supermarket chain.
Well, for a small, export-driven, externally over-dependent economy, that was a big turnaround.
The reasons could be related to the government stimulus, tax breaks, protectionist measures (or hint of such measures) and positive response from citizens. I am sure the analysts will be doing the rational analyses of the economic turnaround. But clearly the mood is positive, and at the same time, costs have given up. The costs of doing business must be going up, notwithstanding the easy availability of real estate space at prime locations. More locals are obviously getting jobs.
It appears to me that Singapore will continue on this trajectory for the next 18 months or so, and then taper off. The GDP growth coming in now and for the next few quarters will make up for the losses over the last six quarters or so.
Good for Singapore and Kudos to its economic management skills in a rather trying environment,
Cheers,
Vijay Srinivasan
31st Jan 2010
Mumbai
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