Factors in Economic Growth

Abstract

Late in 1991, the scatter-gun of recession hit the Japanese economy, having already struck Western Europe and North America. As Japan followed the world’s two other largest markets into a prolonged slump, economists in their observation posts expected to see the rest of the Asian flying geese formation dragged down. Singapore looked particularly exposed, with trade more than three times the size of GDP and 27 per cent of exports to the US in 1991 depending on sales of disk drives alone.¹ Such fears proved groundless when demand for disk drives boomed as the US responded to recession by accelerating the replacement of staff with computers. More importantly for Asia as a whole, intra-regional trade proved highly resilient. As the Asian Development Bank pointed out in its Asian Development Outlook 1994, trade within the region grew faster than trade with the rest of the world between 1992 and 1993. Singapore, for instance, was swift to take advantage of new trading opportunities, emerging in 1991 as Vietnam’s largest trading partner. Prime Minister Goh Chok Tong has also been seeking commercial opportunities in Burma at a time when many Western governments have been reluctant to associate themselves openly with the State Law and Order Restoration Council (SLORC) regime. Although Singapore’s GDP growth was restrained to 5.8 per cent in 1992 it rose to 9.9 per cent in 1993 as the financial services industry expanded rapidly.