9 / 17  BIS central bankers' speeches  First, we should not grow despondent over our slowing rate of economic growth. The empirical experience of countries over time shows a negative relationship between level of income and the growth of income. It is not a perfect negative relationship as you can see from the scatter but it suggests that countries with low levels of GDP per capita tend to have higher rates of GDP growth. This is called “catch-up” in the literature. Meanwhile, countries with higher levels of GDP per capita tend to grow at slower rates as they are more mature. Singapore is a mature economy as you can see: it has one of the highest levels of per capita income in the world. We will not be able to sustain the 6-7% rates of growth that were seen a decade ago. And there’s nothing to be unhappy about this. In fact, our position above the downward sloping line in the slide shows that we have managed to grow faster in recent years than countries with similar levels of per capita income. 10 / 17  BIS central bankers' speeches  But while we must accept a lower rate of growth than before, as a global city, we cannot afford to grow too slowly either. It seems many leading global cities grow at rates between 2.5-3.5%, faster than the national average of the countries they are a part of.
Ravi Menon: Economic dynamism amidst demographic change Transcript of remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the IPS Singapore Perspectives 2018, Singapore, 22 January 2018. * * * Ladies and gentlemen, good morning. I want to first thank IPS for the opportunity to share my thoughts with this large audience. I would also like to commend IPS for convening a conference on what is an important, existential topic: the implications of demographic change. I will focus my presentation on the economic implications of demographic change: what it means for economic growth and economic dynamism. The two are different. My presentation will centre around two broad themes. First, I will describe our demographic trilemma – the constraints and the choices we need to make. Second, I would like to argue that demographics is not destiny – why economic dynamism is not a numbers game and how we can remain dynamic amidst this demographic challenge. 1 / 17  BIS central bankers' speeches  Let’s start with the total fertility rate, or TFR. By the way, we must be one of the few countries in the world where most people know what TFR stands for! It is indeed an existential issue for us. The TFR is the starting point of all demographic analysis. Singapore has had a sustained decline in its TFR. Our TFR fell from around 1.8 in the 1980s (which is already below the replacement level of 2.1) to about 1.3 in the early 2000s.