Kenneth Jeyaretnam: NODX plunge exposes real struggle in Singapore's economy

SINGAPORE: Mr Kenneth Jeyaretnam, the Secretary-General of the Reform Party, expressed profound concern over the alarming decline in Singapore's Non-oil Domestic Exports (NODX) in March 2024, which was significantly worse than most economists expected.

In a recent blog post, Mr Jeyaretnam emphasized that the decline in the share of consumption in Singapore's GDP reflects the real struggles faced by many Singaporeans, who feel a sense of relative impoverishment.

He highlighted the challenges of making ends meet due to higher costs compared to consumers in other advanced countries and lower wages per hour.

Official data released by Enterprise Singapore (ES) on Wednesday (17 Apr) revealed that the NODX contracted by 20.7% year-on-year, a stark contrast to the slight reduction of 0.2% in February.

Mr Jeyaretnam, a Cambridge-trained economist and a former hedge fund manager, pointed out that while NODX is an important indicator, it only represents one aspect of Gross Domestic Product (GDP).

He emphasized that GDP encompasses private consumption, government spending, domestic investment, and net exports.

He illustrated a concerning trend over the past decade, revealing a decline in private consumption expenditure as a percentage of GDP from 37% in 2013 to 31% in 2023, despite the total GDP reaching approximately $673 billion in 2023.

Meanwhile, net exports surged significantly from 23% to 37% of GDP during the same period.

Mr Jeyaretnam warned the shift indicates an imbalance in the Singaporean economy, with the government prioritizing increasing net exports by holding down domestic consumption.

"By contrast private consumption expenditures in most developed economies like the US are close to 70%. Not only has consumption fallen precipitously as a share of GDP. Investment, or Gross Fixed Capital Formation, has declined from 28% of GDP in 2013 to only 22% in 2023."

Furthermore, he claimed that the decline in the share of consumption in GDP aligns with the experiences of many Singaporeans who feel a sense of relative impoverishment.

"They are struggling to make ends meet with much higher costs than consumers in other advanced countries and much lower wages per hour, " he claimed.

Mr Jeyaretnam further accused the PAP government of prioritizing the generation of larger surpluses at the expense of ordinary citizens, utilizing what he described as "accounting tricks" in the national budget to channel funds into reserves rather than investing in Singapore.

He criticized the government for allegedly failing to provide transparency regarding the utilization of these reserves and questioned the necessity of accumulating such vast reserves at the expense of current and past generations of Singaporeans.

He urged Singaporeans to question government officials like Lawrence Wong about the low consumption levels and the purported rush to boost reserves beyond the reach of citizens.

"Every Singaporean should remember what the PAP really think of them when their turn comes to cast their vote at the upcoming election, " Mr Jeyaretnam concluded.

President Tharman lauds PAP Govt’s budget

Previously, President Tharman Shanmugaratnam emphasized Singapore’s distinctive approach to budgeting, noting the nation’s proactive measures to ensure financial sustainability and prudent spending practices.

Approving the government’s spending plans for the coming financial year in March, he emphasized Singapore’s avoidance of what he termed as “magical thinking,” a practice prevalent in many countries.

Tharman noted the challenges posed by ageing populations and the imperative to address climate change, suggesting that most countries would need to increase spending in the years ahead.

“We have avoided what many countries are doing: Which is to spend first, borrow so they can finance the spending, let government debts rise to unsustainable levels, and hope that revenues will somehow spring up to pay for it later,” Mr Tharman said.

“Magical thinking always ends up unhappily.”

Mr Tharman emphasized that the next generation faces a “raw deal” when governments inevitably confront economic realities.

This can lead to cuts in government spending, deterioration of critical public facilities, or significant increases in taxes, all of which he deemed inherently unfair and contrary to the principles established in Singapore’s constitutional framework.

“That’s simply unfair, and something that our whole system of rules in the Constitution is set up to avoid,” he added.

He further explained that he and the Council of Presidential Advisers scrutinized the financial sustainability of the plans presented by Deputy Prime Minister Lawrence Wong and the Finance Ministry (MOF).

“It is how we ensure that we never have to draw down our reserves, except when exceptional crises hit Singapore,” the President said.

“And that we remain fair, to today’s generation and to our grandchildren’s generation. And their grandchildren too.”