Workers’ Party MP Jamus Lim (Sengkang GRC), who is an Associate Professor of Economics at ESSEC Business School, took to Facebook to explain inflation from an economist’s point of view.
He recently made a speech in Parliament concerning what Singapore can do to combat inflation, which was responded to by Minister of State Alvin Tan.Â
Mr Tan said “the government was concerned with the cost of living, and that inflation wasn’t a ‘theoretical exercise’ for them,” wrote Assoc Prof Lim in a July 29 Facebook post.
“That’s good to hear, not least because the challenges Singaporeans are facing are indeed very real for everyone, but what the government has done thus far to tackle the problem doesn’t seem to be sufficient for anyone.”
The Sengkang GRC MP explained that inflation, which is occurring not only in Singapore but all over the globe, is the rate of change in prices, causing goods to become more expensive.
“Inflation happens when price rises are persistent,” Assoc Prof Lim went on to write.
He added that despite current concerns, many economists don’t believe inflation will go on beyond next year.
However, it is expected to take a toll on many Singaporeans, if salary raises do not keep pace.
“Yet even when this inflation storm passes, not everyone will be made whole. For many Singaporeans, inflation is not just an inconvenience. If salaries don’t increase to offset higher prices, the current episode will quickly morph into cost-of-living crisis.”
And while it’s possible to adopt a wait-and-see attitude when it comes to wage increases, this could be risky, as inflation could become “unanchored.”
There are steps that Singapore can take, he added, “for short-circuiting the inflation process, to keep a lid on rising costs and prices.”
These include selling government bonds that mature far in the future, as well as allowing the Singapore dollar to appreciate in value.
Assoc Prof Lim added, “Some may be aware that MAS has reported losses as a result. There are some technical reasons why I believe this isn’t necessarily a big deal, which I suspect MAS will explain in due course.Â
But more importantly, we should recognize that even if there are losses incurred to keep inflation low for Singaporean consumers, the costs may well be worthwhile, from the perspective of national welfare.”
He also wrote that the government can increase its spending, noting that the Ministry of Finance’s fiscal package of $1.5 billion “is actually far smaller than the increase in revenue collected in the most recent fiscal year.”
Assoc Prof Lim also underlined that “we want our fiscal policy to be as expansionary as possible.”Â
He explained what he meant this way: “We want to tap on the brakes and slow the economy, but we don’t want to slam on them so hard we trigger a recession. We want to pump in some gas so that the engine doesn’t stall.”
He also reiterated the WP’s stand against the upcoming hike in the Goods and Services Tax (GST), which is set to begin at the start of 2023.
“Needless to say, raising the GST at the end of this year would not serve this purpose.Â
When the GST increase was debated, Finance Minister Wong said that they would remain open to macro conditions. It now seems poorly timed, and we should postpone it.”
/TISG
Jamus Lim: Resident shares concerns over migrant professionals crowding out locals – Singapore NewsÂ
Resident talks to Jamus Lim about challenges singles face in SingaporeÂ