Singapore’s GDP figures have long been a source of pride for the government. Proof positive – or so they say – of Singapore’s economic miracle, the miracle which allowed Singapore, in the oft-repeated words of Lee Kuan Yew, to move from “third world to first”. However there are many reasons to be skeptical about Singapore’s economic achievements, not least because many citizens feel that the promise of a first world standard of living was never delivered, although a corresponding cost of living definitely has. Without wanting to repeat the many very valid arguments against relying on GDP as a measure of national wellbeing, in this post I seek to explain how even GDP itself may be distorting the picture in Singapore – specifically due to a relationship between inadequate CPF returns and GDP which I don’t believe has been discussed elsewhere.
The question is whether our government’s policy of giving below inflation rates of return on CPF savings has led indirectly to higher measures of GDP?