Singapore Prime Minister Lee Hsien Loong, in his National Day message, has cut the 2008 GDP growth forecast to between 4 per cent and 5 per cent from an earlier estimate of between 4 per cent and 6 per cent.

He also said the country faces a tough year ahead as it is beginning to feel the impact of a US slowdown.

“For the whole year, we expect growth to be between 4 and 5 per cent,” Mr Lee said in his annual message, which was televised on the eve of Singapore’s 43rd birthday.

Mr Lee said the Singapore economy had expanded by 4.5 per cent in the first six months of 2008.

“Singapore’s economy has so far been partly buffered, because we’ve been carried along by the vibrancy of the Asian region. But Asian economies are starting to feel the impact of America’s problems, and so are we. We must therefore prepare ourselves for a bumpy year ahead,” he said.

Mr Lee acknowledged the problems Singaporeans are facing are due to global inflation. And while the government cannot prevent prices from going up as they are worldwide, it is trying to lighten the burden on Singaporeans through schemes like Workfare and ComCare.

“We are doing the next best thing: to put in place effective relief measures, and provide the poor and the needy with the help they need. We must look beyond immediate problems like the cost of living, to understand what is happening in the world around us, discover new opportunities and tackle our longer-term challenges,” he said.

The annual message is seen as a prelude to the National Day Rally, where the Prime Minister goes into further detail on the long-term challenges facing the country.

In the televised message on Friday, Mr Lee highlighted three other points.

First, the upgrading of Singapore’s economy: to do so, there must be investment in its people. One way is through education. To that end, Singapore is building a fourth university which will take its first batch of students in 2011, well ahead of the original target of 2015. The publicly-funded university will have its campus in Changi.

The second point Mr Lee highlighted was how to encourage Singaporeans to have more children to boost the country’s total fertility rate, which currently stands at only 1.29

PM Lee said: “We can create an environment where Singaporeans see them (children) as a natural and important part of life, and where young couples get support in starting families. We have looked at this comprehensively and will take further steps to address the practical problems which couples face.”

Mr Lee also spoke of adapting Singapore to be able to educate and engage what he called “cyber-citizens”.

He said: “We must adapt ourselves to it, and use it to educate and engage our cyber-citizens. We will evolve our policies and rules, our economy and society, to take full advantage. We will continue to open up our system progressively.”

Mr Lee hinted that the country will continue to open up space for political and societal debate, saying it is the “right way to go”. But he also said that as the country continues to open up, its new generation of citizens need to understand that all freedoms come with responsibilities.

Source : Channel NewsAsia – 8 Aug 2008

Tharman signals that weak global economy could hit Singapore hard

THE Singapore economy is grinding towards a slowdown, and Finance Minister Tharman Shanmugaratnam said yesterday that growth is unlikely to rebound ‘anytime soon’.

It is the clearest signal yet from the Government that the weakening US and global economy is hitting Singapore harder than initially expected.

Mr Tharman said: ‘I don’t think we’re near the bottom yet, it’s something we’re all watching, especially the American economy.’

The turn of events is recent, he indicated.

‘The American economy is in a much more perilous state now compared to just three or six months ago. The risk facing the financial system, which is a global system …is still very substantial.’

The continued weakness in the global economy ‘may extend well into next year, and we won’t be able to avoid a slowdown if that happens’, he said.

The Finance Minister’s remarks at a ceremony at ST Aerospace to mark National Day took economists like OCBC Bank’s Selena Ling by surprise.

‘What Mr Tharman said sounds a little more bearish than the official stance for the year to date,’ she said.

The economists also said his comments strike a somewhat downbeat note ahead of Prime Minister Lee Hsien Loong’s National Day message tonight – when he typically would update Singapore’s growth forecast for the year – and the release of the final figures of the second-quarter GDP growth on Monday.

Official forecasts set this year’s growth between 4 and 6 per cent.

But last month, Government preliminary estimates showed the economy grew by 1.9 per cent in the second quarter, the slowest pace in five years. It led private-sector economists to lower their forecasts to between 3.5 and 5.8 per cent.

Singapore’s manufacturing sector has borne the brunt of the global slowdown as exports are hit hard.

Also, growth in services, especially finance and tourism, is cooling off, said Citigroup economist Kit Wei Zheng.

Like other economists, he expects the Government to shift its focus from fighting inflation to battling the slowdown.

As the ‘inflation dragon has not been slain’, he said any immediate policy changes will likely be fiscal – like cutting taxes for business – than monetary.

But in time, the Singapore dollar, which has been allowed to strengthen to fight inflation, may weaken to make local exports more competitive.

Speaking to reporters, Mr Tharman noted the Singapore economy is fundamentally competitive and ‘if we slow down it’s because the rest of the world is slowing down’.

He also said, in his speech, the Singapore spirit of ‘unity, tenacity and perseverance’ will take the nation though these difficult times, as shown in earlier crises.

He had reassuring words for those worried about the high cost of living.

The Government still expects inflation to ease towards the year’s end and ‘we should be within our latest inflation forecast of 6-7 per cent’, thanks to the recent decline in oil prices and levelling off of food

Source : Straits Times – 8 Aug 2008