Budget 2016: Not "overly pessimistic" for 2016, but restructuring is urgent, critical

The Singapore economy is expected to grow at 1 per cent to 3 per cent for the year. This is "not very different" from the 2 per cent growth seen in 2015, said Heng Swee Keat, Minister for Finance.

'While conditions are difficult, we should not be overly pessimistic," said Mr Heng.

This comes amid structural changes abroad, and at home. China is rebalancing towards consumption and services-led growth, and developing innovation-intensive industries. India is also attracting manufacturing investments. "These ongoing changes are rapidly changing the patterns of trade and specialisation in Asia," said Mr Heng.

There are also growth opportunities out of Asean, and Singapore is in the centre of the Asian growth story.

Technological changes, especially in robotics, automation and artificial intelligence, are disrupting business models across all sectors.

Back at home, manpower growth is slowing, while the population is ageing.

"Real wage increases over the past few years have benefited workers and households. But unless productivity improves in tandem, we will be less competitive, and both businesses and workers will be worse off," said Mr Heng.

Taken together, these pose "intense challenges" for businesses here, he added. "The need to restructure is both urgent and critical."