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SINGAPORE will see a subdued performance from externally oriented industries in the short term, mirroring the modest growth in the global economy, said Finance Minister Heng Swee Keat on Tuesday.
But Singapore can tap on opportunities by shifting its manufacturing services towards niche production, riding on the rise in consumption spending in Asia, and having financial institutions offer modern services. Asia can also meet the cyclical challenges, given the stronger fundamentals compared to the late 1990s.
"We cannot be fully insulated from the headwinds in the external markets, but the more domestic-oriented sectors including healthcare and education should continue to post steady growth," said Mr Heng at a conference. "Still, we must be alert to the medium-term structural changes. As a small economy, we must continue to be outward-oriented."
Mr Heng said in the short term, investors need to remain vigilant to market volatility, with asset prices supported in part by the period of prolonged low interest rates. But overall, Asia is expected to continue outperforming the rest of the world by a significant margin, with an average 6 per cent growth rate expected from 2015 to 2020.
Economic restructuring and innovation will be critical for sustainable growth and returns to investment, noted Mr Heng. He pointed to China's five-year plan that aims to rebalance demand, and revive productivity growth. "It is an ambitious endeavour, not made easier by the sporadic bouts of stock market and currency volatility," Mr Heng added. "But I believe the Chinese government is determined to press ahead with structural reforms, even as it takes measures to ease the transitional pains and maintain financial stability."