Today Enterprise Singapore released the latest trade figures showing that non-oil domestic exports (NODX) declined on a seasonally adjusted month-on-month basis by nearly 15% while year-on-year exports declined by almost the same amount. Merchandise exports are lower. than a year ago and have not really grown since 2019 before the pandemic started. Imports have fallen faster than exports. Since the level of imports is related to GDP this suggests the economy is contracting or stagnant despite the Government’s remarkable official GDP figures which showed the economy expanding by 3.6% in 2022 and by 0.1% in the first quarter. Here are the relevant graphs from Enterprise Singapore:

However merchandise trade is only part of the current account which includes trade in services as well as income from abroad due to SIngaporeans and domestic income due to foreigners. Despite falling levels of trade the current account surplus has increased considerably over the last few years. In 2022 it amounted to $124 billion, or 19% of GDP, up from $83 billion or 16% of GDP in 2019.

Our huge current account surplus is a good illustration of the squeeze the PAP Government has imposed on Singaporeans’ living standards in order to generate huge public sector surpluses which go into our reserves, never to re-emerge. Despite the smoke-and-mirrors of the Net Investment Returns Contribution (NIRC), which the Government pretends is to be used for current spending and to improve the lives of Singaporeans, the various tricks the Government uses mean that actually Singaporeans are continually depositing their hard earned money in the reserves rather than getting dividends from them. I have written extensively about these tricks since at least 2012 here in my blog. In contrast to other developed countries where the norm is for consumption to be about 60-70% of GDP, in Singapore the PAP have succeeded in depressing it below 40%.

So when the PAP tell you a recession is imminent due to external factors beyond their control and that you need to tighten your belts and go without for the sake of Singapore, you can take it from me that that’s customary PAP lies dressed up as corner shop economics. They want you to continue to cut back and accept that the Government can’t do.more to help you unless taxes go up because they want to continue taking money away from you and sticking it in the reserves. No transparency and no account of what is really going on. As I have pointed out many times the people who endured the most hardship to accumulate our reserves are disappearing fast. Given our low birth rate, the only people who will benefit from your continued austerity are new citizens. I’m not anti-immigration but the PAP have yet to explain why the reserves need to keep growing infinitely far beyond any conceivable future needs and why more cannot be used to invest in Singaporeans alive today.

We could theoretically run a much smaller current account surplus of, say, 5% of GDP instead of 19%. This would mean that there would be room to expand domestic consumption through cutting taxes or increasing government spending by 14% of GDP or at least $90 billion (In fact we could spend much more depending on the import component in Government spending). $90 billion is roughly what I said could be spent based on 3-4% of our likely total financial reserves of $3 trillion (without even factoring in the value of the land reserves).

The balance of payments, which includes both the capital and current accounts shows a massive and unexplained outflow of $279 billion which is far greater than the current account surplus. Since foreign direct investment was $124 billion the outflow net of this was $400 billion. I suspect that a large part of this is Government investment abroad. You need to question why the PAP continually tell you that even the meagre few billion dollars the Government spends on citizens’ welfare requires taxes to be raised when it is simultaneously able to funnel so much money abroad. Clearly when Lawrence Wong and others talk about Singapore’s bright future if we stay united, the PAP are busy investing the surpluses extracted from the citizens in foreign companies and startups. This would be palatable if Singaporeans reaped the benefits but they don’t. In fact I have shown that in only one year did the Government run a deficit. So much for their fake commitment to Singaporeans.

Rather than gullibly trusting in the PAP and allowing their leaders to infantilize them, Singaporeans need to become far less accepting of PAP arguments. Only electing an Opposition worthy of its name will force the PAP to explain why decades of underconsumption and low living standards for Singaporeans are necessary. A failure to do so will just allow scandals like the PM paying his wife a salary so embarrassing that he refuses to disclose it to continue. And we shouldn’t forget Ridoutgate in which two senior Ministers, Shanmugam and Balakrishnan, have mismanaged or used their power to take advantage of the mismanagement of enormous state lands for their benefit, which is certainly draining the reserves for the benefit of an elite few at the expense of other Singaporeans as so helpfully explained by Indranee Rajah and Desmond Lee. History teaches us that where there are muddy waters, there is far worse lurking beneath the surface and that the initial revelations are just the tip of the iceberg. You can bet that Singapore is no exception.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam