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Economy grew 2.8% in 2014: PM Lee

But productivity fell 0.5 per cent in first nine months; country needs 'productivity-driven growth'
Thursday, January 1, 2015 - 05:50
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ECONOMIC GROWTH STILL MATTERS: It enables Singapore to earn a good living so it can invest in its people and future, said PM Lee.

Singapore

SINGAPORE'S economy performed "moderately well" in 2014 to grow 2.8 per cent, but the showing was dimmed by a "disappointing" minus 0.5 per cent productivity growth in the first nine months of the year.

Disclosing these numbers in his traditional New Year Message on Wednesday, Prime Minister Lee Hsien Loong said Singapore must redouble its efforts to help companies and workers upgrade and become more productive.

"We must do better (in productivity growth)," he said. "Otherwise, our incomes cannot continue to rise, and will soon stagnate."

Mr Lee noted, however, that for 2014, real median incomes continued to rise, leading to a 10 per cent jump over the last five years. "Unlike many developed countries, we are not facing unemployment and stagnant wages," he added. "We can take heart from this."

Private-sector economists contacted by The Business Times were unsurprised by the year-on-year economic growth figure, as it is not far from the official forecast of 3.0 per cent. And while it was below 2013's 4.1 per cent growth, last year's economic growth was still higher than the 1.9 per cent posted in 2012.

The Ministry of Trade and Industry (MTI) will unveil the details of Singapore's 2014 economic performance on Friday.

In its last statement in November, MTI said the economy grew 3.3 per cent in the first nine months of the year, but that growth was tipped to taper for the remaining months of 2014. Expecting global growth to pick up modestly, MTI said it projected the Singapore economy to grow 2 to 4 per cent in 2015.

Private-sector economists such as DBS Bank's Irving Seah are looking at a "more volatile picture" in the year ahead, but still foresee the local economy growing 3.2 per cent; overall, private-sector economists expect the Singapore economy to grow 3.1 per cent, supported by a firm US recovery, said CIMB's Song Seng Wun.

In his New Year Message, Mr Lee lamented that productivity growth had been weak for the third year in a row. But even when that picks up, he said Singapore's economy will grow slower than it used to.

"One reason for this is that we have been tightening policies, including those on foreign workers, to get our economy onto a path of sustainable, productivity-driven growth," he said.

He stressed that economic growth remained important.

"Those who say that it is unimportant are gravely mistaken," he said. "Growth is not the be-all and end-all, but it is the only way for us to create good jobs for all and earn a good living, so that as a nation, we can invest in our people and our future."

Growth also provides the resources to improve social well-being and sustain social safety nets - and this has been a major priority for the government as it makes fundamental shifts to prepare for the future.

"These shifts will give Singaporeans at each stage of life greater assurance, more opportunities and a better home."

The Pioneer Generation Package and the MediShield Life, which comes into effect this year, are examples of government initiatives introduced to give Singaporeans greater assurance.

They "will help make Singapore a more fair and just society, where risks are shared and the vulnerable among us receive more help".

To create more opportunities so that all can achieve their aspirations, he said, the government will continue to invest heavily in early-childhood education, making every school a good school and building a strong and diverse tertiary system through ITEs, polytechnics and universities.

And to build a better home for all Singaporeans, Mr Lee noted that 28,000 families collected their keys to new HDB flats last year; 26,000 more will do so this year.

"Five hundred more buses are already plying our roads, with more to come. In the coming years, we will see new MRT lines, more trains and more frequent train services, especially at peak hours. In our urban environment, we are creating special places in every corner of Singapore, from the Jurong Lake District to Mandai."

*Full text of PM Lee's message

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