Why growth is not a bad word

Editorial, The Straits Times, 27 Oct 2012

SINGAPORE cannot grow fast when, as multilateral financial institutions are predicting, almost all other economies in the region and the West are slowing. And Singaporeans - including those who believe slower growth will ease domestic economic and social pressures - should not see the forecasts as anything but sobering. Business cycles will wax and wane, but when slow growth persists over a sustained period, the consequences could be profound and lasting.

It has become fashionable in some quarters to dismiss the benefits of economic growth. Some say a bit of a slowdown might be good to recalibrate prices and expectations, and ease social tensions. Others go further to argue that slower growth might have hitherto unrecognised benefits, from a better work-life balance, less stress in schools and perhaps even a higher birth rate.

Well, Singaporeans should be careful what they wish for. Given the dark economic clouds that are looming globally, slower growth might well come sooner than we think. Even if a recession is avoided, some businesses, especially small and medium-sized enterprises, might go bust during lean times and investor confidence will be hit. While likely to reduce the need for foreign workers, a slowdown might also cause unemployment to rise among Singaporeans, especially less skilled, lower-income workers who can least afford to lose their jobs. Regaining economic traction in a competitive world will not be an easy task.

When the tide turns, slow-growth champions might find economic and social trade-offs more unpleasant in a downturn than in a growing economy. During good times, problems can be addressed by, for example, using policy initiatives to help integrate newcomers and improve social cohesion. But the harshness of lean times will mean constrained resources for economic and social programmes to ride out the storm. Those who harbour idyllic notions that a slower pace of growth might mean more time for a round of leisurely golf could well find a less rosy scenario of people struggling to pay their mortgages or country club memberships.

Growth, however, is not an end in itself. The point is to avoid it being a loaded word, one way or the other. Ultimately, "it's not about the numbers", as Acting Manpower Minister Tan Chuan-Jin has noted. Growth is a means to an end, namely, creating jobs with good wages; generating resources for health, education, social welfare and infrastructure.

In reality, the issue is not so much about slow or fast growth, but how best to harness the country's limited resources and contend with its inherent resource constraints to maximise the life chances of all its people.