Economic Growth Still Intact Despite Market Jitters: PM Lee

Source : The Business Times, 20 Aug 2007

DESPITE the recent market jitters that may affect Asia in the short term, Singapore’s underlying growth potential in the long run stays intact in the 4-6 per cent range, said Prime Minister Lee Hsien Loong yesterday.

‘After Sars, we estimated Singapore’s sustainable growth at 3-5 per cent,’ Mr Lee revealed at the close of his National Day Rally speech. ‘We were a little bit conservative but we thought it was realistic.

‘In the light of the last few years, MTI (Ministry of Trade and Industry) has reviewed these numbers and we’ve concluded that we should go for a higher target. So we are raising our growth estimate to 4-6 per cent for the next five to 10 years.’

Despite the upward revision, the official growth trend forecast still falls behind estimates by private sector economists. With contributions from labour, capital and productivity, they have estimated Singapore’s growth trend to be at a near-8 per cent pace, according to a BT report last month.

Mr Lee, however, views the 4-6 per cent long-term growth as an ambitious feat. ‘At our stage of development for Singapore, this is a very ambitious target,’ he said. ‘Very few countries have done it, maybe Japan until it ran into problems in the 1990s but not the European countries, not even America.

‘But I think we can do it provided we continue to adapt, stay open, remain competitive and ride the wave. Then we will grow, with the whole of Asia and not just based on what we have on this little island in Singapore, physically here.’
Commenting for the first time on the market turbulence triggered by the US sub-prime woes, Mr Lee said that the situation may affect Asia over the next three to six months. ‘But even if it does, the fundamentals in Asia remain strong and so too for Singapore,’ he added.

Even with the positive outlook, he urged Singaporeans to strive to do better than the revised estimate. After all, the environment looks favourable for the next few years. The economy is more vibrant and competitive, relations with neighbours are good, and Singaporeans as well as Singapore companies are going all over the world.

Singapore’s economy grew 7.6 per cent in the first six months of this year, riding on a better-than-expected 8.6 per cent second quarter growth.