Economy expected to grow 2.5% this year

SINGAPORE — The Republic’s economy is expected to be a shade rosier this year, with growth of about 2.5 per cent, higher than last year’s 2 per cent expansion, Prime Minister Lee Hsien Loong said on Tuesday (Aug 8), in his National Day message.

Still, he cautioned that urgent issues, both domestically and elsewhere, confront the Government, including the trend towards protectionism, Singapore’s ongoing economic transformation, and not least, the threat of terrorism, which has been edging closer.

While “the world is unsettled and the outlook uncertain”, Mr Lee stressed that the Government was already at work on these issues and is making progress.

Amid the scourge of terrorist attacks around the globe which are frequent and hitting closer to Singapore’s shores, Mr Lee said the nation was stepping up its vigilance to guard against the threat. 

One major task was to strengthen harmony between the races, 
he noted. On the economic front, international trade, a key engine of Singapore’s growth, was at risk of protectionism, Mr Lee said. 

Domestically, as the country’s economy goes through an upgrade, students and workers are mastering new skills and keeping abreast of technology, he added. 

And to prepare workers and businesses to operate in the future economy, the Government is also working with them to transform industries, one by one. 

In its Budget Statement last year, the Government announced industry transformation maps spanning 23 sectors, under a multi-billion-dollar programme to drive Singapore’s longer-term economic progress.

The Ministry of Trade and Industry previously forecast economic growth this year to be between 1 per cent and 3 per cent. 

Barring downside risks, such as rising anti-globalisation sentiments, the ministry said growth is expected to outperform last year’s.

On the back of better-than-expected performance in the first quarter, private-sector economists had raised their growth forecast for Singapore’s economy in the latest quarterly survey by the Monetary Authority of

Singapore released in June to 2.5 per cent, up from their previous estimate of 2.3 per cent.

Economists who spoke to TODAY said the Government’s latest forecast for the whole year was “fair”. Mr Song Seng Wun from CIMB Private Banking noted that the Republic’s economy had expanded by an average of 2.5 per cent in the first six months of the year. 

Citing pockets of growth in sectors such as hospitality, he said the economic growth for the rest of the year should be similar, unless things go pear-shaped in the fourth quarter.

United Overseas Bank economist Francis Tan, however, maintained his growth forecast of 2.4 per cent. He said early signs were pointing to growth in the manufacturing sector — which was boosted by electronics production in the first half of the year — slowing in the second half. 

Meanwhile, growth in the services sector, the traditional driver of the Republic’s economy, remains tepid and will stay this way for the rest of the year, he added.