Taking stock: How much did SG50 boost the economy?

Singapore

SO how much tangible good resonated from the year-long festivities celebrating Singapore's 50th year of independence?

It depends on who you ask.

Ask the average Singaporean, and most would agree that it has strengthened national identity and pride.

To Finance Minister Heng Swee Keat, who headed a steering committee that guided and coordinated plans for the celebrations, or SG50 as it was called, the festivities have sparked a new Singapore spirit and given people a greater sense of home.

Ask the economists, and they will paint a slightly different picture, albeit in dollars and cents.

They say that the cornucopia of SG50-themed government and private spending, promotions, giveaways and contests - including air-ticket promotions and SG50 fish cakes - did help lower prices, but their aggregated impact was not big enough to help lift economic sentiment.

For a country that catapulted to global economic stardom in the 50 years after independence was thrusted upon it, the economic pessimism that ran through most of 2015 made Singapore's plethora of jubilee celebrations all the more poignant.

"The glow from SG50 is starting to fade as we move into 2016. Despite ongoing headline disinflation, consumption expenditure has not accelerated," said ANZ economist Ng Weiwen.

"SG50 may have provided a small boost to gross domestic product (GDP), but this is not certain. We do look for a slowdown in growth next year, but this is irrespective of the effect of SG50," added UBS economist Alice Fulwood.

To be sure, SG50-themed initiatives from the public sector did help bring down prices or boost growth. For example, headline inflation, evidenced by consumer price index (CPI) figures, fell by a bit.

The Monetary Authority of Singapore (MAS) estimated that several SG50-related measures, such as price promotions for selected places of interest, "had the effect of lowering CPI-All Items inflation slightly by 0.01 percentage point in the first three quarters of 2015", a Ministry of Trade and Industry (MTI) spokesman told The Business Times.

This included free public transport on Aug 9, which pulled down headline inflation by 0.005 percentage point in the first three quarters of this year.

Promotions for places of interest also eased inflation by 0.006 percentage point over the same period.

SG50 was also an opportunity to attract tourist dollars in an otherwise dismal year for tourism. Year-on-year increases in visitor arrivals for July and August counteracted the steep drops in numbers seen in the first quarter, resulting in a 0.1 per cent increase for the first 10 months of this year.

The better showing in July and August could partially be attributed to the Singapore Tourism Board's (STB) Golden Jubilee marketing campaign.

Under this campaign, the STB partnered hotels, Changi Airport Group, Singapore Airlines and TripAdvisor to offer promotions or to widen its marketing outreach.

Said the MTI spokesman: "These promotional efforts are likely to have provided some support to tourism-related sectors such as accommodation and air transport during the year."

While the tourism sector accounted for about S$38.5 billion, or 10.1 per cent of GDP in 2014, according to the World Travel and Tourism Council, its contribution to the economy in 2015 is expected to increase by 4.7 per cent.

This is faster than total economic growth, noted UBS's Ms Fulwood. "This implies that tourism did help to boost GDP growth this year, and some of this was likely due to SG50."

Aside from direct impact, the public sector also injected more funds into the economy to help amplify the SG50 cheer.

The estimated cost of this year's National Day Parade (NDP), together with additional sites and new facilities that allowed more people to partake in the country's 50th birthday bash, stood at about S$40 million, said Defence Minister Ng Eng Hen earlier this year. In addition, the 1.2 million goodie bags for NDP given to every household added another S$10 million to the bill.

Separately, a celebration fund disbursed about S$10 million to organisers of about 400 ground-up initiatives that commemorated SG50.

SG50 initiatives were generally aimed at "creating positive atmospherics and an air of festivity", rather than achieving spillover effects on the economy, said the MTI spokesman.

That did not stop businesses from offering promotions or special offers, noted observers.

Though the sheer diversity of private-sector SG50 offers makes it hard to ascertain how much cheaper prices became, official figures do reveal a drop in August prices as SG50 celebrations came to a head that month.

The fall in headline inflation, or CPI-All numbers, in August was one of the steepest for 2015 - 0.8 per cent year on year.

Excluding accommodation and private road transport costs, core inflation was at 0.2 per cent, also one of the lowest in 2015 .

Sales figures seemed to benefit from the lower prices, with the total retail sales index in August increasing 6.5 per cent year on year, the third-highest this year. Excluding car sales, it still jumped 1.8 per cent, the second-highest increase.

SG50 was also a good opportunity for retailers to move their stocks, noted an observer.

Said branding specialist Samir Dixit, managing director of Brand Finance Asia Pacific: "Too many retailers took the chance to use 'SG50' as a discounting tool, to get rid of stocks, to clear inventories. And Singaporeans are always looking forward to good discounts, and SG50 was like a year-long Groupon offer for them."

But consumers and retailers were quick to revert to pre-SG50 cautiousness, revealing economic insecurities as Singapore turns the page to 2016.

Retail sales figures showed that subsequent purchases were falling back to levels before August. "This suggests that sentiment remains brittle with the economic recovery in 2016 hinging on a highly uncertain trade and external outlook for Singapore," said ANZ's Mr Ng.

Business expectations for the third quarter of this year increased by 14.6 percentage points, but hit a historical low of -2.93 percentage points when looking towards the first quarter of 2016, according to the Singapore Commercial Credit Bureau's Business Optimism Index study.

Similarly, The Business Times-UniSIM Business Climate Survey found that pessimism among businesses has become more extensive and intensive, with the reading for business prospects till March next year at -65 per cent, the lowest level since the 2008 global financial crisis.

For more of BT's year-in-review stories, visit bt.sg/review_15