Test Of Singapore's Economic Resilience

Source : The Business Times, May 9, 2008

MUCH has been written about the nature of the beast, about whether it's shaped like a U, V, L or even W. We're talking of course about the impending - or, as oracles like former US Federal Reserve chief Alan Greenspan and Berkshire Hathaway's Warren Buffett contend, the ongoing - US recession. What's clear is that the world's largest economy, hammered by a massive financial crisis that has reverberated across the globe and further weakened by ever-rising oil prices, is on the ropes. And the impact of a US economy brought to its knees by a recession, whatever the shape, is bound to shake national economies everywhere.

Singapore awaits with concern, but also a measure of quiet assurance. It's a beast we've faced before, this spectre of global slowdown, and the painful lessons have been well learnt. The first hard lesson is that a small and open economy like Singapore's can never be fully shielded or buffered from external tremors. The corollary, though, is that the right preparation can make all the difference between holding firm in the storm and being blown away.

Thus Prime Minister Lee Hsien Loong's assurance in his May Day message that 'however the US financial problems play out, I am confident of our ability to cope'. Earlier this week, in a dialogue with over 100 business and financial leaders, PM Lee expanded on that premise. If things do get significantly worse - and at this point that's a big 'if' - the government has several possible options, he noted. Fiscal policy measures would be one such option. There could be directed assistance to help lower-income workers. Or the government could resuscitate construction projects that had been put on hold. 'We have the resources, we have the wherewithal,' Mr Lee noted.

Significantly, the savvy audience would have noted that the options he mentioned were not being pulled out of a vacuum. The global situation is being closely tracked by the country's planners, and Singapore's own economic performance is comprehensively monitored. Scenarios have been drawn up to cover the spectrum of possibilities. Any urgent or emergency measures would thus be as apt for the situation as is humanly possible.

However, true economic resilience is not just holding firm in the short term, but growing in strength through adversity over the long term. That is why the longer-term initiatives to keep this island-nation globally competitive and relevant must continue apace.

The hardware is being upgraded on schedule, from airports to highways and the MRT system, to a national ultra high-speed infocomm infrastructure that will spark a whole new panoply of high-tech products and services. As important will be developing the 'software', a new generation of world-class, world-conscious Singaporeans. Get the formula right and the world will beat a path to Singapore's door, recession or no recession.