Trillionaires! (In Singapore dollars)

What a year it has been! Singaporeans have emerged richer, not poorer, from the recession. Total household net wealth is now estimated to be a trillion Singapore dollars (about $720 billion), says the Monetary Authority of Singapore, continuing the success story told by the Singapore Department of Statistics, which announced in September:

Singapore household net wealth grew marginally by 0.3 percent from 952 billion Singapore dollars in 2007 to 954 billion Singapore dollars in 2008.

Amazing, isn't it, that while wages dropped, the economy tanked, and corporates haemorrhaged red ink, the people grew richer?

Look at the figures from the MAS Financial Stability Review for November. It's not as if that household assets haven't gone up and down with the economy. They hit a low in the first quarter of this year when the economy shrank by as much as 10 percent compared with the same period last year. But look at them now. Wow!

With 20/20 hindsight, MAS explains:

The recent improvement can be attributed largely to a recovery in the equity and property markets since Q1 2009. After declining in Q4 2007 and Q1 2009, household holdings of equity and managed funds are estimated to have recovered by about 40% to S$150 billion in Q3 2009, in tandem with the rising global equity markets. Similarly, property holdings have turned around, up by an estimated 9% to S$537 billion in Q3 2009 from the low of S$491 billion in Q2 2009.

Furthermore, household assets remain more than six times that of household liabilities.

Households have been cautious in taking on new liabilities given the uncertain economic outlook. Total liabilities increased moderately by 4.4% year-on-year in Q3 2009, which is much lower than the long-term average growth rate of about 13%. Most of the increase came from housing loans… After moderating from around 15% in Q4 2007 to 8.8% in Q4 2008, housing loan growth has seen a recent uptick to 12% in Q3 2009 due to increased activity in the property market.

And that housing loan uptick to 12 percent has rattled the central bank. The MAS wants to prick the property bubble before it gets out of hand. Better safe than sorry. Some oldtimer at the MAS must have taken to heart that old Blood, Sweat and Tears song:

What goes up must come down,
Spinning wheel got to go round.

Not forgetting the hard up

I came across only one mention that some people might already be poorer. The MAS says:

In short, households have generally weathered the crisis relatively well on the back of their strong balance sheets. However, the impact might not have been uniform across different household income groups. Those who were retrenched or highly leveraged would likely have come under more pressure.

Maybe they are mentioned only in passing for statistical reasons. Unemployment overall is only 3.4 percent though it has hit 5 percent among Singapore residents.

The MAS is not sanguine about the future, though. It warns:

The sustainability of the global economic recovery remains uncertain, and any adverse shock would weigh on the performance of the Singapore economy given its openness.

Passing the buck?

That's what a central bank is expected to do. Keep the money in circulation.