THE Singapore economy is now expected to grow 1.5 to 2.5 per cent this year, Prime Minister Lee Hsien Loong said yesterday. This cuts the top end of the government's earlier 1-3 per cent forecast, while raising its bottom end by half a percentage point.
In his National Day message yesterday evening, Mr Lee said that Singapore is "doing quite well" against a backdrop of serious economic problems in Europe and the United States, and China and India slowing down.
The economy grew 1.7 per cent in the first half, he said. Assuming no changes to Q1 GDP, this points to year-on-year growth of 2 per cent in the second quarter, marginally above the flash estimate of 1.9 per cent growth.
But economists had been expecting a stronger upgrade to the Q2 flash estimate, after a surge in biomedical output led to a surprisingly strong manufacturing performance in June.
Bank of America Merrill Lynch economist Chua Hak Bin thinks services probably stagnated in Q2 to grow less than the flash estimate of one per cent.
This may also imply that the economy did not escape a sequential contraction in Q2 after all, which means the risk of a technical recession remains.
Citi's Kit Wei Zheng estimates that the half-year growth figure translates into a 0.7 per cent quarter-on-quarter contraction in Q2, slightly smaller than the flash estimate of a 1.1 per cent contraction. Full details of Q2 economic performance will be announced by the Ministry of Trade and Industry tomorrow.
In his televised message, Mr Lee touched on how his government is responding to the range of issues Singaporeans face, from housing to public transport, inflation to immigration. But beyond tackling specific issues, Mr Lee now sees the need for Singapore to undertake a broader review of policies, particularly social and education ones.
"To still be a shining red dot twenty years from now, we must rethink our approaches and reinvent ourselves," he said. Core principles such as meritocracy, multi-racialism and financial prudence cannot change, but the government should review what needs to change and where bolder action is needed.
Mr Lee has asked Education Minister Heng Swee Keat to lead a committee of younger ministers to "take a fresh look at what we are doing".
In a statement yesterday, Mr Heng said the team he forms will engage Singaporeans in a broader, national conversation about themselves. "What do we want our country, Singapore, to be in 2030? What are our ideals? What principles should underpin our public policies and what values should guide us as a people? What attributes will enable us to attain our ideals?" Mr Heng said.
Similar questions were asked and answered by Mr Lee himself in yesterday's message. Singapore must offer hope of a better future, be an inclusive society with a heart, and be a home that all Singaporeans love, he said, outlining the themes he is likely to elaborate on in his National Day Rally on Aug 26.