Singapore on a record high, here come the foreigners!

Here we go again.

Singapore is booming and earlier government projections have gone bust.

Not only has the government doubled its economic growth forecast to an astonishing record high of  13 to 15 per cent this year.

Plans to reduce the foreign influx and slow down to a more sustainable growth rate have also been put on hold.

More than 100,000 foreign workers are set to enter Singapore this year, reports the Straits Times.

Prime Minister Lee Hsien Loong is quoted as saying: "If we don't allow the foreign workers in, you are going to have overheating."

Read that as "Your wages will soar and property prices skyrocket until employers decide it is better to do business elsewhere."

So foreign workers do depress wages while making the economy more competitive, right?

Now if you think there are too many foreigners, well, you know what the government says: Make more babies.

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Singapore compared with other Asian economies

Singapore suffered a bigger drop in exports than China, Hong Kong, South Korea, Thailand and Vietnam during the recession. See the chart below based on the World Bank report released yesterday.

WorldBank-Merchandise-Expor

But the Singapore stock market rebounded more strongly than any other market in the region except Thailand, South Korea and Taiwan, according to the same report. This chart shows all four were back to nearly pre-crisis levels last month.

WorldBank-financial-market-

Hong Kong has bigger foreign reserves than Singapore, but look at China's growing giant pile.

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More people working in Singapore than before

More than 2.99 million of Singapore's 4.99 million population were working by the end of last year. That's more than ever in the last decade, as this chart shows.

Employed_singapore

The number of jobs actually went up despite the recession. So did unemployment — marginally.

But the good news is overall unemployment fell from 3.4% to 2.1% in the fourth quarter, according to preliminary estimates by the Ministry of Manpower. Unemployment among Singapore residents — citizens and permanent residents — fell from 5% to 3% during the same period.

That can be no consolation for the 87,000 residents who found themselves jobless last year, up from 62,900 in 2008. Overall unemployment rose to 3% last year from 2.2% the year before and, for Singapore residents, from 3.2% to 4.3%.

Unemployed_singapore

But as the Manpower Ministry press release says:

Local employment grew by 43,000 in 2009. In contrast, foreign employment fell by 4,200 compared to a record increase of 156,900 in 2008. As at December 2009, there were 1.05 million foreigners forming 35.2% of the 2.99 million persons employed in Singapore. The majority comprising 64.8% or 1.94 million persons employed were locals.

So the number of locals employed has gone up from 1.9 million in 2008. The number of foreigners working has dipped from 1.057 million to 1.053 million. There were just under a million foreigners working in Singapore in 2007 and the figure in 2006 was 756,000.

Working_residents_foreigner

All the figures in these charts are based on data from the Statistics Department of Singapore and the Ministry of Manpower. The employment figures for 2005 to 2009 are taken from the preliminary estimates given by the ministry at the beginning of the year and for 2004 to 2001 from the ministry's mid-year estimates presented on this page.

Downturns and elections in Singapore

The next elections coming after a recession will break the trend in Singapore. Three of the past downturns struck just a year after a general election and one came in an election year.

Thank you, Paul, for pointing that out in your comment on my previous post.

There were elections in 1963, 1984, 1997 and 2001 — and the economy shrank in 1964, 1985, 1998 and 2001.

This is also the first time Singapore has suffered two bad years in a row, with the economy growing only 1.1 per cent in 2008 before shrinking 2.1 per cent in 2009.

All four previous downturns were preceded and followed by good years, according to Singapore Statistics records dating back to 1960.

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Tharman: We want private investment, not tax hike

Tharman_N509 Singapore Finance Minister Tharman Shanmugaratnam acknowledges Singapore has an unemployment problem. That is why Singapore doesn't want to raise income taxes — "certainly not corporate income taxes" — because "our key objective should be to see private investment grow, as the basis for long-term growth", he tells the International Monetary Fund's Finance and Development magazine.

He emerges as the odd man out among the Asians interviewed in one respect. He says growth will continue to depend on exports, which is true for Singapore, while others see the need to transform their economies. They are Ajith Cabraal, governor of the Central Bank of Sri Lanka; Shuli Hu, a leading Chinese journalist; Yung Chul Park from Seoul National University; and Raghuram Rajan, professor of finance at the University of Chicago and economic adviser to the Prime Minister of India. Read the interview here.

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