Singapore shaves expectations

SINGAPORE, 21 October 2011 – Singapore must get used to slower economic growth in the next 10 years as it faces tougher global competition and tightens the inflow of foreign workers, Prime Minister Lee Hsien Loong said Thursday.

Constraints of space and a small population will also limit the city-state’s ability to maintain the exceptionally high growth rates it has achieved in the past, Lee said in a speech in parliament.

“Our growth is likely to slow down. Our economy is more developed, it can’t expand in the same… way it used to – seven to eight percent a year effortlessly year after year,” said Lee.

“We have made five and a half percent growth (a year on average) over the last decade. Over the next 10 years, we’ve set a target of three to five percent.

“But I would say if we can make three-plus percent (growth) consistently over the next 10 years, we’ve had a good decade.”

He said the country would have to “moderate, adjust our expectations, understand what is possible within those parameters”.

Singapore’s trade-reliant economy expanded 14.5% in 2010, rebounding sharply from a 0.8% contraction in 2009 due to a global financial crisis.

The government this month cut its growth forecast for 2011 to 5% from 5 to 6% previously due to the softening global economic conditions.

Lee, 59, said the city-state, which has developed itself as a financial centre, tourism hub and manufacturing base for products such as oil rigs, specialty chemicals, computer chips and pharmaceuticals, must now compete with stronger rivals from around the world.

Singapore’s middle income and white-collar professionals will also face fiercer competition from the 10 million people who graduate in China and India every year, the prime minister said.

Lee said slowing down the intake of foreign workers and immigrants will lead to slower growth and that companies are already feeling the impact.

The government was forced to tighten the inflow of foreign workers following complaints from citizens that they were taking away local jobs and were competing for housing, hospital beds and even space in the metro train.

Singaporeans had voiced their displeasure with the government’s liberal foreign workers policy in general elections in May and the presidential polls in August that saw popular support for the ruling People’s Action Party significantly eroded.

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