In today’s news, PM Lee was quoted as saying that Singapore’s economy will continue to grow at about 5% yearly. Sounds like “good growth” at first look, but if we think further about it, it’s hardly surprising, and perhaps 5% is even too low.

It’s quite clear by now that Singapore intends to have a population of 6.5 million eventually. This is approximately a 40% increase. If I am not wrong, the target is to have this in 20 years’ time. So this means an annualised population growth rate of 2%, of which migrants are supposed to take up a huge portion. So this means that our workforce will grow by approximately 2% a year.

Taking this into perspective when considering the 5% GDP growth rate – 2% or so will come from the increased workforce… leaving a balance of 3% – which isn’t that impressive afterall after taking into account inflation rates. This means that we aren’t really growing the economy much through technology improvements, which would probably be a better, more sustainable way of economic expansion.

At the same time, we will have to suffer a poorer quality of life associated with having to squeeze in 2 million more people on this small island. On top of that, we are expecting 50% increase in tourist arrivals when the Integrated Resorts open for business. It will sure be quite a squash!

So how about 20 years later? By that time, what will the government do to grow the economy? Aim for another 2 million additional population? We, and our government policy makers… eventually have to face reality – is this policy of capital deepening really workable and sustainable in the long term? How much more population can Singapore accomodate? When there is no more space for population growth, how will our economy be expected to grow?

So are we really going to be doing better?

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