S'pore Economy Growth Estimate Raised To 4%-6%

Source : The Straits Times, Aug 20, 2007













The new estimate of growth potential 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. -- ST PHOTO: MALCOLM MCLEOD

SINGAPORE'S economy has the potential to grow by an average of four to six per cent per annum over the next five to 10 years, said the Ministry of Trade and Industry, in raising its earlier estimate.

The rise in potential growth reflects the effects of economic reforms over the last five years, said MTI in a statement on Monday.

These reforms have enabled actual growth to average 6.1 per cent per annum, exceeding the three to five per cent medium-term potential estimated by the Economic Review Committee (ERC) in February 2003, it said.

The new estimate of growth potential 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 one to two per cent and productivity increase of two to three per cent, said MTI.

Higher productivity
'The economy's diversification into higher value-added industries and influx of new capital investments will increase productivity growth,' said MTI.

Economic restructuring in an increasingly competitive environment has also helped to enhance efficiency.

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

Higher labour force growth
Healthy economic conditions and increased labour market flexibility have helped to increase the labour force participation rates of women and older workers.

In 2006, 65 per cent of the resident working-age population were economically active, up from the 64.1 per cent in 1996. Higher inflows of expatriate talent have also contributed to the underlying increase in labour force growth.

Favourable environment
The external environment over the next 5 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. ,' said MTI.

Also, the South-east Aian countries have recovered from the Asian financial crisis and are returning to a path of growth and stability.

If these conditions remain favourable, Singapore should be able to achieve a growth rate at the upper end of the four to six per cent range over the next 5 years,' said MTI.