Singapore’s Economic Growth Slowed to 2.8% in 2014, Lee Says

By Sharon Chen and Michael Heath

Photographer: Toru Yamanaka/AFP via Getty Images

Prime Minister Lee Hsien Loong said, “Our economy has performed moderately well in... Read More

Singapore’s economic growth cooled in 2014 and the nation will experience slower expansion than it’s used to, Prime Minister Lee Hsien Loong said.
Gross domestic product rose 2.8 percent this year, Lee, 62, said in his New Year message today. That compares with a November forecast of about 3 percent, and an expansion of 3.9 percent in 2013.
“Our economy has performed moderately well in 2014,” Lee said. “However, our productivity performance has been disappointing” and the country must intensify efforts to help companies and workers upgrade, he said.
Export-dependent Singapore is experiencing the effects of a faltering global economy, with China on track to record its smallest growth in almost a quarter century and weaknesses in Europe and Japan. Government efforts to slow the inflow of cheap foreign labor has also pushed up business costs.
“Our growth will be slower than we are used to,” Lee said. “One
reason for this is that we have been tightening policies, including on foreign workers, to get our economy onto a path of sustainable, productivity-driven growth.”
Singapore’s trade ministry will release preliminary fourth-quarter GDP figures at 8 a.m. local time on Jan. 2. The economy probably expanded an annualized 3 percent from the prior three months, according to a Bloomberg News survey.

GDP Forecast

The government has forecast an expansion of 2 percent to 4 percent in 2015 as China, its largest trading partner, seeks to deleverage its economy without a hard landing. In contrast, the U.S., among the top markets for Singapore’s exports, grew at the fastest pace in more than a decade as consumer and business spending surged in the third quarter.
Real median incomes in the Southeast Asian nation have risen 10 percent over the last five years, and Singapore isn’t facing the unemployment and stagnant wages many developed countries grapple with, Lee said.
Lee’s administration will spend close to S$4 billion ($3 billion) over the next five years on subsidies and financial support for a new universal health insurance plan called MediShield Life, to be implemented at the end of 2015, according to the Ministry of Health. It also plans to spend S$9 billion for health care and other benefits for the elderly as part of a Pioneer Generation Package.
While economic growth is slowing, it is important to still create expansion, the prime minister said.
“Growth also gives us the resources to improve social well-being and sustain our social safety nets,” Lee said. “Because of these new schemes, social spending is rising steadily. We have been prudent in the past so we can afford the new programs we are launching.”
The island’s population has jumped by more than 1.4 million since 2000 to about 5.5 million with more foreign labor, leading to voter discontent over congestion and competition for housing. The number of elderly in Singapore, or those 65 years and older, will triple to 900,000 by 2030, according to the National Population and Talent Division.