Singapore’s economy not in a crisis? Perhaps. But that’s even scarier…

By November 4, 2016Current

TL;DR – Don’t be THAT frog.

via Indignation.wordpress

via Indignation.wordpress

There’s a very strange feeling in Singapore these days. Walk around some malls, and there are still throngs of people around. Perhaps they are only out and about because of Pokemon Go. Or perhaps the economy isn’t really that bad. That said, there are also reports out there that look like they’re obituaries for shopping malls in Singapore.

There is also no denying that in recent months, there is so much bad news hinting that all’s not well with Singapore Inc.

There are many companies moving out of Singapore and cutting staff as they do so. And it’s not just big companies moving out. In just the first six months of this year, 42,000 companies closed. In contrast, 48,000 closed in the whole of last year. Economic growth has also slowed dramatically. Advance estimates put Singapore’s growth in third quarter this year to be only 0.6% compared to the same period last year. That is the slowest since 2009.



Any comparison of the current state of our economy with that of 2009 will inevitably bring to mind spectres of the last economic crisis that Singapore was in. It’s no wonder that there’s a sense amongst Singaporeans that Singapore is facing an economic crisis. But, according to PM Lee, that is not the case.

Why are we not in a crisis?

Technically, PM Lee is right. While economic growth has slowed, our economy is still growing. That’s very different from the last crisis, when our economy actually contracted sharply in 2008 and 2009, with the contraction in Q1 of 2009 being the sharpest at -9.5%.

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Also, in 2008, investments into Singapore plummeted. For instance, foreign direct investments (FDI) in local export-manufacturing plunged from $7.8 billion in 2007 to just $0.7 billion in Q1-Q3 2008. In contrast, EDB has managed to attract $11.5 billion in FDI last year. These investments are projected to create 17,000 jobs eventually.

Put together, while Singapore’s economy is facing many headwinds today, there are some bright spots. There are various sectors where there are still jobs to be filled. In other words, the situation today is very different from when Singapore was in the last crisis back in 2008 and 2009. In the last crisis, everything was down. Almost every sector was suffering.

Today, some sectors are dying. But some sectors are thriving. And that makes the situation we are in scarier than what we were in during the last crisis.

Why is it scarier now?


PM Lee had used a medical analogy to describe the situation Singapore was in during the 2009 crisis to compare it with what we are facing today:

“In 2008, 2009, it was a crisis. We were sick; we needed medicine. We took an antibiotic, one course of powerful medicine; we recovered. Luckily the germs also stopped coming and so we were ok.

But this is not a kind of an infection which we can take a quick medicine to cure. This one, you see the doctor, the doctor says: ‘No, you don’t need me. You need to see a physical trainer; you need to build up your muscles; you need to build up your skills; you need to strengthen yourself; you need to keep at it.’ In a few months, you will see a difference, few years, you will be a different person”

That’s one way of looking at it. But there’s yet another way to look at it. It’s the frog and water analogy.

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Singapore in crisis (like that of 2008-2009) is like a frog being thrown into boiling water. It will jump out as quickly as it can. Singapore today is like a frog being put into cold water that is slowly being heated up. The frog won’t jump out. It’ll just slowly cook to death.



Back when Singapore faced a crisis, we banded together. The government took bold steps, going as far as drawing on our past reserves. Everyone was prepped and prepared, ready and willing to accept some pain so that the whole economy could recover. And recover we did. Spectacularly too. Singapore’s economy grew at an impressive 14.5% in 2010.

The challenge today is precisely that we aren’t facing a crisis. It feels like a more insidious malaise… a… sian feeling that saps our strength, that slowly gnaws away our vibrancy. Unlike the last crisis, there aren’t any “big-bang” approaches that we can take that will jolt our economy back into a 14.5% annual growth.

Instead, we have to let some industries die, accept that some companies must close, some people will have to move into very different careers to do very different jobs. But that will be painful. How do you tell a company that they ought to wind up?  How do you tell people to move into different jobs even before they get retrenched? Will they listen? Will they have the right mindset? Especially when we aren’t facing an outright crisis?

Yes, it is easy to tell today’s unemployed that they need to upgrade and re-skill so that they can fit into tomorrow’s jobs. But it is not at all easy to tell tomorrow’s unemployed (people who are still employed today) that they need to upgrade for jobs of the future.

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That’s the challenge right now. That’s why it’s scarier. Perhaps we really do need a crisis to shock us all into having the right mindset.

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Jake Koh

Author Jake Koh

Recovering sushi addict, I'm a man of mystery and power, whose power is exceeded only by his mystery.

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