Singapore's growth slows to 6.5%

Singapore's growth slows to 6.5%

SINGAPORE (AFP): Singapore's economic growth slowed to 6.5 percent in 1996 following an electronics downturn, and could dip further next year, Prime Minister Goh Chok Tong said in a New Year message Tuesday.

Goh, leading the ruling People's Action Party (PAP) into general elections today, said economic growth should range between five and seven percent in 1997.

He reminded Singaporeans that the current slowdown reflected the extent of the island state's dependence on external factors, saying it required a competent government to manage it.

"Despite careful economic management and despite remaining competitive, we could not insulate ourselves from the winds blowing in the international economy," Goh said.

"We must have a competent team in charge of our economy, to steer our little country safely through the winds and waves," he said. "We cannot afford to make mistakes, unlike other bigger countries."

Goh's PAP was returned to power last week after the opposition decided to contest less than half the 83 seats up for grabs in the January 2 polls. But some younger ministers are facing challenges in hotly contested wards.

The island state's manufacturing-driven economy grew by 8.8 percent in 1995 and about 10 percent in each of the two previous years.

The government in August had projected that the economy would grow by seven to eight percent in 1996 but last month trimmed the forecast to six percent.

Goh said Tuesday that the economy slowed down in the second half of 1996 because of a global electronics downturn and other cyclical factors but added that inflation remained low at 1.3 percent.

Electronics account for almost half of Singapore's manufacturing output and two-thirds of its manufactured exports. The slowdown has had a ripple effect over virtually all sectors of the tiny city state's economy, analysts say.

Many expect a recovery in electronics only by mid-1977. Goh said wages rose 6.1 percent, adding that incomes increased faster than the cost of living, as they had done for many years.

The inflow of foreign investments also remained strong, with manufacturing investment commitments reaching a record 8.1 billion Singapore dollars (5.78 billion US) in 1996.

"We should have no difficulty making steady growth of five-to- seven percent in 1997," said Goh, a 55-year-old economist who assumed power in November 1990 from Lee Kuan Yew, now a senior minister in his cabinet.

Goh said that building a strong economy would remain one of the government's top priorities.

"We have ambitious plans to make Singapore our best home. We want to invest in infrastructure, better homes, health care and education. We want to enhance your assets. But first we must create the wealth," Goh said.