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THE Ministry of Finance recently unveiled the members of the Economic Strategy Committee (ESC). The aim of the committee is to develop strategies to keep the economy growing - and spread the gains to Singaporeans.
The ESC is a follow-up to the valuable work done by the Economic Review Committee from 2001 to 2003 which strategically steered the Singapore economy away from the more traditional industries in which it was losing competitiveness to new growth areas. The success of that strategy was evident right upto 2008 when the global financial crisis overturned the old world order. The new ESC will have its work cut out, given the consensus that recent crisis is a game changer.
There is a little-publicised department within the Ministry of Trade and Industry, which calls itself the Futures Group. The group essentially functions as a foresight think tank and is tasked with coming out with ideas/ observations/insights that will impact Singapore's economic and job growth in the future. In April, the group did a study on the possible future of global demand, post-crisis. This study - which painted three possible post-crisis scenarios - forms the larger context that the current ESC sub-committee could use.
The three possible scenarios were:
One, 'Wounded Beast', where the old world order continues. But because global imbalances which are not dealt with, booms and busts take place even more frequently.
Two, 'Chasm', where the G3 - the US, Europe and Japan - increase their savings rate, leading to a shortfall in global demand. Asian domestic consumption will take decades to make up for the demand shortfall, and consequently global growth rate will be considerably lower.
In the third nightmare scenario, named 'Abyss', public debt burdens rise to unstable levels, both public and private spending diminish and social and political unrest increases.
According to the Futures Group, all three scenarios present significant challenges for Singapore. The city-state needs to address the three main themes of resilience, survival and relevance to secure its continued economic progress.
While the future is fraught with uncertainties, there are grounds to be optimistic about Singapore's future. That the government is constantly looking beyond the curve is one reason to be sanguine. That it has the resolve and the capability to take hard decisions and implement difficult policies is another. Also helpful is the absence of racial and communal politics that shackle a number of countries. But here, pragmatism reigns. And even as it takes hard economic decisions, the government is increasingly strengthening the social compact by introducing more programmes targeted at the weaker members of society. Thus, despite the daunting challenges of our uncertain world, there is room for hope.
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