In the mailbox, a short note from Eddie about Singapore and Thailand. Interesting argument, now could the differing population structures (as Eddie notes) tell us something about why there is this apparent difference?
You made a point about Asia’s weakness being the lack of domestic demand. It does seems to be the stumbling block of their development. An inability to emerge from their export-oriented, first stage development. Economic success is still very much judged by the ability to attract foreign investments and to export. But if everybody wants to export, who’s to import?
To some extent, the difference between Thailand and Spore is interesting. Thailand chose to support domestic demand. Spore did little (we raised the value added tax by 1%, Thailand cut theirs). The virtuous domestic circle always seems to start once there’s positive feedback with the property market. But I’m more than amazed by their results so far. GDP grew almost 7% in the first quarter. Manufacturing production AND exports are growing around 20% now.
Even before the Asia crisis, the talk was always that China posed a greater threat to mid-ladder economies like Thailand / Malaysia than top of the ladder Singapore. Thailand was the middle of nowhere economy. Yet here we are, not just Thai production, but Thai exports are outpacing Singapore. Nobody in S’pore, of course, remembers and think it of any significance.
We’ll see whether Thailand can manage to safely navigate their recovery through the stormy seas. Investors are catching on it as apparently the Thai stock market is the best performing so far this year. I’m betting Malaysia will do fairly well too. If nothing else, Malaysia has a median age of 25 or so. Spore has little going for it, except its past
reputation.
Oh. I attended a seminar given by Spore’s team on the recently concluded FTA with the US. Negotiations took
3 years And for what? Tariff savings, on average, amount to 0.1% or so. That was of course wiped out in a day by the depreciation of the USD. But they are touting it as a future growth driver.
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