- POSTED: 31 Dec 2013 17:13
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In his New Year message, Prime Minister Lee Hsien Loong said the GDP forecast for next year remains on track - at between 2 and 4 per cent.
SINGAPORE: Singapore's economy grew by 3.7 per cent this year, better than initially expected.
In his New Year message on Tuesday, Prime Minister Lee Hsien Loong said the Gross Domestic Product (GDP) forecast for next year remains on track - at between 2 and 4 per cent.
He added that Singapore encountered a "few rough spots" this year, which tested the country as a whole.
But Mr Lee said Singaporeans came through the challenges together.
Singapore's 2013 GDP growth figure was in line with the government's earlier revised growth forecast of between 3.5 and 4 per cent, and this has translated into positive news for workers.
Mr Lee said median salaries increased by 3.9 per cent in real terms, while pay for the lower-income group went up as well.
He added that this means better jobs and new opportunities for workers, even as the economy restructures.
However, Mr Lee noted that how Singapore fares in the future will also depend on external factors such as the performance of the European and American economies.
He added that while the outlook for Asia remains positive, problems and tensions persist in Northeast Asia, and disputes over the South China Sea continue to pose challenges in Southeast Asia.
But observers remain bullish on Singapore's prospects in 2014, citing a strong external economic environment.
Associate Professor Tan Khee Giap, co-director of the Asia Competitiveness Institute at the Lee Kuan Yew School of Public Policy, said next year's growth forecast will likely be in the top end of the 2-4 per cent range.
He added: "The external environment is really robust now. So we have to make a really difficult decision whether we want to grow slow or we want to grow when the external environment is favourable.
"The Prime Minister talked about infrastructure investment, housing and a more inclusive society with social expenditure. The money will have to come (from) somewhere.
"So if we want to go for slow growth, then we also have to adapt our expectation as to how you want the government to come in to fund social expenditure, rapid infrastructure expansion, education investment. I think those are surely the considerations the government must have and I think the people must understand what it means by having slower growth, and faster growth when the external environment is favourable."
Selena Ling, head of treasury research and strategy at OCBC Bank, said the 3.7 per cent full-year growth is a tad lower than the 3.8 per cent she expected.
She said: "This suggests that fourth-quarter growth momentum may have underperformed. Manufacturing likely decelerated from the third quarter's heady pace, but construction and services probably remained fairly robust in the fourth quarter."
Ms Ling also agreed that 2014's growth will likely be on the upper half of the government's projection - at between 3 and 4 per cent.
"The more benign macro-economic backdrop, namely the pick-up in the US economy, eurozone recovery and stabilisation in China, should bode well for the externally-oriented sectors. However, the domestic challenges of economic restructuring, tight labour market and elevated costs will remain key challenges for Singapore companies in the year ahead," she said.
Edward Lee, regional head of research (Southeast Asia) at Standard Chartered, expects some amount of downsizing as companies adapt to the new economy.
He said: "It will only be natural for cases to happen where certain companies close, re-locate, downsize, re-orientate... particularly as Singapore continues with its restructuring. At the same time, there will be new companies starting which can survive in the new economy."
He is also positive about next year's growth prospects.
"Our full-year 2014 GDP growth forecast is 4.4 per cent. Given the expected improvement in large economies, including the US and euro area, the government's 2-4 per cent growth forecast appears reasonable for now. Consumption should also remain resilient as the labour market remains tight and will help to sustain wage growth," he said.
Prime Minister Lee noted that the government has set a new direction for Singapore domestically - to have a more open and mobile society, to strengthen social safety nets, and share the fruits of progress more widely.
He said there has been steady progress.
For example, first-timer queues for HDB flats have shortened. In education, there is now a broader definition of success. And in healthcare, the new MediShield Life insurance will cover all Singaporeans, even those with pre-existing conditions.
Mr Lee said the government is making major shifts forward and will implement changes progressively.
He also said that in the next few years, the government will take further initiatives to address other needs and deal with new problems that arise.
Mr Lee said that after the Budget session, the government will prorogue Parliament.
"When Parliament reopens in May, the government will set out our agenda for the rest of our term," he said.
Mr Lee also touched on the Population White Paper which was released this year.
He said it provoked "intense response" but the debate has helped everyone understand why population is such an important issue and why Singapore cannot avoid trade-offs.
Mr Lee reiterated that the government is taking a "balanced approach" - reducing but not cutting off the inflow of foreign workers.
He also touched on the recent riot in Little India.
He said Singapore will continue to treat foreign workers fairly, but that they are also expected to "obey our laws and social norms".
He said the riot was "inexcusable".
Mr Lee said the Committee of Inquiry will establish how the riot happened and how Singapore can prevent such incidents in future.
He added that the incident reminds Singaporeans that they can never take good order, peace and stability for granted.
Mr Lee expressed confidence in Singapore's future - provided nothing "untoward happens in Asia". He said Singapore is doing well, investing in the future and transforming the country's physical environment. He called on citizens to nurture the Singapore spirit to create a brighter future for all.
"The Singapore spirit burns bright in our people - in the concern of volunteers who distributed masks to vulnerable groups during the haze, in the determination of a SEA Games cyclist who fought back from a serious car accident to win gold, and in the courage of Home Team officers who formed human shields to protect colleagues during the riot in Little India. We must nurture this spirit, and keep faith with our nation and our people. By trusting and helping one another, we will create a brighter future for ourselves and our children," he said.