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Are Happy Days Here Again?

The Dragon King of Bhutan, Jigme Singye Wangchuck, probably had the right idea when he coined the phrase “Gross Happiness Index”, some 40 years ago.

Rather than trying to build an economy based on materialism, he instead preferred to build it on the Buddhist foundations of happiness. At the time he was not taken seriously. But Bhutan is having the last laugh now, after years of consistent economic growth. It even grew in the face of the financial turmoil that has shaken many developed countries.

Happiness, or the feel-good factor, it seems, should never be underestimated. But it is not easy to define.

All of us have some idea as to what happiness is or should be. However, it is difficult to describe with any degree of mathematical precision. There are no equations or formulas that we can use to let us know if we are happy. That is because feeling good is a movable feast.

That said, there are a number of commonly-used economic measures which we can look at to gauge whether the people in a country are, on balance, happy.

The concept of happiness, for example, feeds into an important idea, namely, the notion of consumer confidence. When consumers feel happy or confident, they are more likely to spend rather than save. After all, if they believe that they are secure in their jobs, then they are more willing to spend their savings or take on debt, especially longer-term debt, for the purchase of more expensive items such as a house or a car.

In Singapore, consumers, on the whole, are feeling quite confident. The current reading of around 130 points, for example, is above the long-term average of 122. It means that according to the ANZ-Roy Morgan survey, a preponderance of people is optimistic that the Singapore economy should improve over the next 12 months.

In an economy such as Singapore, consumer confidence is vital, given that about half of our growth is driven by consumer spending. Consequently, it could pay to keep an eye on the performance of retailers and other consumer-related shares. They could be a useful barometer of the Singapore economy.

But shares in retailers have been far from inspiring.

Shares in computer seller Challenger Technologies (SGX: 573) are down around 4% over the last 12 months. Meanwhile, shares in general retailers Metro Holdings (SGX: M01) and Isetan (Singapore) are some 3% and 9% lower, respectively.

For these retailers, happy days are not quite here again, yet. But watch these barometers of the Singapore economy closely – they can be a useful forward indicator of economic growth.

A version of this article first appeared in The Independent on Sunday.

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