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Singapore Growth Quickened in 2013 as Lee Pursues Economic Shift

A sculpture stands near commercial buildings in the central business district of Singapore. Photographer: Brent Lewin/Bloomberg
A sculpture stands near commercial buildings in the central business district of Singapore. Photographer: Brent Lewin/Bloomberg

Singapore’s growth quickened in 2013 and the country is making progress in economic restructuring while strengthening social safety nets, Prime Minister Lee Hsien Loong said.

Gross domestic product rose 3.7 percent last year, Lee, 61, said in his New Year message released yesterday. That’s in line with the government forecast of 3.5 percent to 4 percent growth and compares with the median in a Bloomberg News survey of economists for a 3.55 percent expansion. The economy grew 1.3 percent in 2012.

“The European and American economies are stabilizing,” Lee said. “Asian prospects are still positive, but there are problems and tensions,” he said, citing regional geopolitical disputes.

Singapore’s economic acceleration last year had been aided by recoveries in the U.S. and Europe, while companies in the city-state adjusted to rising business costs and curbs on cheap foreign labor. The island’s trade promotion agency said in November exports will rebound this year after contracting in 2013, easing pressure on the central bank to allow the currency to weaken to support overseas shipments.

Lee reiterated a forecast for the economy to grow 2 percent to 4 percent in 2014. U.S. consumer confidence is at a four-month high and euro-area factory output grew at a faster pace than economists forecast in December.

“This is consistent and fits into a story of a gradual recovery,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. The central bank “needs to maintain the current policy with much lesser scope for easing, especially if the global recovery continues,” he said.

Safety Nets

The 2013 growth rate given by Lee implies Singapore’s economy grew between 4.1 percent and 4.5 percent in the fourth quarter from a year earlier, Varathan said. The median estimate in a Bloomberg survey is 4.8 percent.

Singapore’s trade ministry will release preliminary fourth-quarter GDP figures at 8 a.m. local time tomorrow. The economy probably shrank an annualized 1.3 percent from the previous three-month period, according to the median of 11 economists surveyed by Bloomberg.

The Singapore dollar dropped more than 3 percent against its U.S. counterpart last year, the biggest annual decline since 2001. The benchmark Straits Times Index of stocks was little changed in 2013, making it the worst-performer among developed markets.

Lee said the government is “working steadily” toward new directions for the country, including strengthening social safety nets and sharing “fruits of progress more widely” through support for low-wage earners and homeownership programs.

Labor Crunch

The island’s population has jumped by more than 1.1 million since mid-2004 to around 5.4 million, leading to voter discontent over congestion and competition for housing. The government has tightened restrictions on foreign workers for four straight years, a move that has led to a labor crunch and hurt businesses.

A riot last month involving about 400 people in an area popular with South Asian foreign workers was “inexcusable,” Lee said yesterday. The incident occurred after a fatal traffic accident and was the nation’s first riot in more than four decades, reigniting the debate about Singapore’s dependence on overseas laborers.

“Whether we bring in more immigrants and foreign workers or fewer, whether we aim for higher growth or lower, there are no easy choices for Singapore,” Lee said. “We are taking a balanced approach, reducing but not cutting off the inflow of foreign workers.”

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