Economic Reforms Over Last 5 Years Have Boosted Growth: MTI

Source : Channel NewsAsia, 21 Aug 2007

Singapore’s economy has the potential to grow by 4 to 6 percent annually over the next 5 to 10 years, says the Trade and Industry Ministry.

Giving this upbeat assessment a day after Prime Minister Lee Hsien Loong spoke of the country’s vibrant growth, the Ministry says this reflected the effects of economic reforms over the last 5 years.

These reforms enabled actual growth to average 6.1 percent per annum, exceeding the 3 to 5 per cent estimated by the Economic Review Committee (ERC) in February 2003.

The new growth potential estimate is based on labour force growth of 1.5 to 2.5 per cent and productivity increase of 2.5 to 3.5 per cent.

This is higher than the ERC’s projected labour force growth of 1 to 2 per cent and productivity increase of 2 to 3 per cent.

The Ministry says economic restructuring in an increasingly competitive environment also helped enhance efficiency.

New high growth sectors like biomedical manufacturing and wealth management, and rejuvenated traditional sectors like marine engineering and tourism also made the economy more resilient to sector-specific shocks.

Healthy economic conditions also helped increase the labour force participation rates of women and older workers.

Meanwhile, the external environment over the next five years is expected to be favourable, increasing the likelihood that Singapore’s growth potential is realised.

While the US, EU and Japan will continue to be important external drivers of demand, the rise of China and India will provide additional boost to growth.

In addition, the Southeast Asian countries have recovered from the Asian financial crisis and are returning to a path of growth and stability.

And if external conditions remained favourable, MTI believes Singapore should be able to achieve a growth rate at the upper end of the 4 to 6 per cent range over the next 5 years. - CNA/ch