The Government announced and state media reported that the economy had grown by 4.4% in the second quarter on a year-on-year basis. This was itself a slowdown from the advance estimate of 4.8% announced in July though of course the downward revision was not admitted in the Ministry of Trade and Industry (MTI) press release. To paint a rosier picture, MTI said this was faster than the 3.8% growth recorded in the first quarter.
However reading a little further I discovered that far from growth having accelerated in the second quarter, it was actually negative. On a month-on-month seasonally adjusted annualized basis the economy contracted by 0.2% . This should have been the significant news since it is a snapshot of how the economy is actually doing now rather than compared with the past. The figure of 4.4% is particularly misleading because there was a “circuit breaker” (the PAP’s euphemism for lockdown) during the second quarter of 2021.
One of the benefits of having an independent media, whose duty is to hold the country’s leaders accountable rather than to ensure that they remain in office enriching themselves with millions of taxpayers’ funds and passing out plum jobs to their children, spouses and relatives, then the negative growth would have been highlighted as it has been in the UK (where the economy contracted by 0.1% in the same period, a better performance than Singapore). and in the US. Furthermore our Statistics Department is just part of MTI and not independent like in the UK, where by law the Office for National Statistics is separate from the Government.
However the fake presentation to make growth look much better than it is appears to be only scratching the surface of the manipulation that is going on at MTI. Economic growth since 2019 has been largely driven by manufacturing, with increases in manufacturing output accounting for 132% of the growth in the economy. This of course means that if we exclude manufacturing the economy would be smaller today than it was in 2019. Never mind the fact that manufacturing employs relatively few Singaporeans, from executive to factory floor level, even though many of the foreign executives may subsequently be fast tracked to citizenship without the inconvenience of having to serve NS like ordinary Singaporeans. Never mind the fact that the sector is largely foreign owned and its huge growth is likely only the result of enormous subsidies and zero tax concessions given by the PAP. In fact some of its output may be illusory and a transfer pricing exercise by MNCs from (relatively) high tax jurisdictions to low tax ones. Ireland has enjoyed enormous growth as well as a result of these fake tax accounting shenanigans without much impact on the real economy and the living standards of the Irish people. Similarly Singaporeans do not see much benefit from this growth in manufacturing output in terms of jobs or income. The Wall Street Journal recently highlighted the growth of high tech manufacturing in Singapore while pointing out it employed relatively few people and omitting to mention the subsidies and tax benefits that must be necessary to induce MNCs to build their factories here rather than in the US or Europe.
However that is not the end of the story. I dug a little deeper and found some puzzling anomalies. MTI uses 2015 prices to calculate real GDP. I looked at the figures for current GDP and GDP calculated using “chained” 2015 prices. For instance, comparing 2021 with 2019 (the last year before the pandemic) GDP at current market prices was 4% higher but when measured at 2015 prices was only 3% higher. However when I looked at manufacturing these figures were reversed. At current prices the manufacturing sector had grown by 12.9% whereas using 2015 prices manufacturing had grown by a whopping 21,7%, nearly 9% faster. Using MTI’s 2015 prices therefore may be making manufacturing’s growth appear much higher than it really is and masking negative growth in the rest of the economy. It is usual for prices of manufactured goods, where there are economies of scale, to fall relative to services, where the scope for productivity improvements has historically been much less. Economists also try to capture the hidden growth coming from the fact that manufactured goods today will likely be of higher quality or have extra features compared to those in the past through what are called ‘hedonic’ indices. But the scale of the difference in only seven years leads me to suspect that something fishy is going on and we should be wary of PAP claims of rapid economic growth and rising real wages when evidence to the contrary is all around us. In fact if we used 2022 prices which would give a lower weight to manufacturing then it is possible that real economic growth since 2019 has been negative and especially so if we look at the part of the economy excluding manufacturing.
It appears that all economic growth is now coming from manufacturing and that this growth in fact is highly inflated. Using 2015 prices, manufacturing has expanded its share of the economy from 20% to 23% over the last two years but at current prices the share is nearly 2% lower. We would like an explanation and justification from MTI for what appear to be serious discrepancies that call into question the Government’s triumphalism. However, given Lawrence Wong’s failure to answer my questions about discrepancies in the Budget, I will be long dead and Singapore will have vanished below rising sea levels before I receive an answer.. The true figures for GDP growth, like the fake Budget expenditure figures, the Net Investment Returns Contributions that do not really exist, and the theoretically enormous reserves that strangely never benefit Singaporeans are just a few of the mysteries that we need answers to.
My dear late father was fond of the quote from John 8:32 , “And ye shall know the truth and the truth shall make you free”. Perhaps one day Singaporeans will elect MPs who will demand answers to these fundamental questions, rather than ones who tiptoe around Parliament fearful of offending LHL, and by so doing at last achieve their freedom.
Kenneth Jeyaretnam
