Aug. 12 (Bloomberg) -- Lee Hsien Loong, eldest son of Lee Kuan Yew, was sworn in as Singapore's third prime minister, succeeding Goh Chok Tong, who led the city-state for 14 years.

Lee, 52, took the oath of office from President S.R. Nathan on the lawns of the 135-year-old Istana government mansion in a ceremony witnessed by some 1,400 Singaporeans ranging from taxi drivers to food sellers to judges, and broadcast live on local TV.

The outdoor ceremony and guest list, scripted by the new premier himself, contrasted with the last handover, in November 1990, in which Goh was sworn in at City Hall in the presence of 200 guests, according to the Straits Times newspaper.

Lee, like his Malaysian counterpart, Abdullah Ahmad Badawi, will also be finance minister. He inherits an economy that's overcome three recessions since 1998 and is tipped to grow this year as quickly as China, the world's fastest-growing major market.

Goh, 63, becomes senior minister and head of the city- state's central bank, while Lee Kuan Yew, the founder of modern Singapore, takes the new title of minister mentor. They were sworn in along with 26 other ministers, including two women.

Lee's Cabinet includes two deputy prime ministers, Tony Tan and S. Jayakumar.

Tan, 64, who was also Goh's deputy prime minister, will retire from the Cabinet after June 30, 2005. He will be replaced by Home Affairs Minister Wong Kan Seng, the government has said.

Jayakumar, 64, will also be law minister. In Goh's Cabinet he was also minister of foreign affairs. Former Trade and Industry Minister George Yeo, 49, is the new foreign minister.

The government this week raised its 2004 economic growth forecast to as much as 9 percent from 7.5 percent after surging exports of electronics and medicines fueled a faster-than- expected expansion in the second quarter.

Growth in gross domestic product in the three months ended June 30 accelerated to an 11.9 percent annualized rate from 11.2 percent in the first quarter, outpacing an initial government estimate of 9.1 percent.

To contact the reporter on this story: Amit Prakash in Singapore at aprakash1@bloomberg.net

Last Updated: August 12, 2004 08:20 EDT