S’pore Expects Slower Growth In 2023 But An Economic Contraction Can Be Avoided, Says PM Lee

PM Lee Warns Of Singapore’s Slower Growth This Year In May Day Message

Economies are trying to recover as the world learns to live with Covid-19.

Despite this, many external factors, such as geopolitical tensions, have thrown countries for a loop, signalling that tough times are yet to be over.

Correspondingly, Prime Minister Lee Hsien Loong said Singapore would likely see slower growth this year, but we should be able to avoid an economic contraction.

In his May Day message, he listed several aspects Singapore has been doing well in, and how the Government will continue to make progress and support Singaporeans who need help adjusting to this highly disruptive period.

Slower growth, but economic contraction is avoidable

PM Lee chronicled the country’s key developments at the start of his message:

• Singapore’s GDP grew 3.6% last year
• sectors hit hard by the pandemic, such as tourism and hospitality, are recovering rapidly
• passenger traffic at Changi Airport is now at 80% of pre-pandemic levels, which is estimated to grow.

Even though slower growth is expected overall, PM Lee assured Singaporeans that we should avoid “an outright contraction”.

Inflation may still be high, but he said unemployment rates have stayed low, and retrenchment numbers remain manageable.

According to personal finance site The Balance, an economic contraction is a decline in economic output, which lead to falling incomes and rising unemployment.

Staying cautiously optimistic about economic prospects

However, external factors are reasons we should be “cautiously optimistic” about immediate economic prospects, as stressed by PM Lee.

“There is a risk of recessions in Western countries as central banks continue raising interest rates to dampen inflation.

“The multilateral trading system is being progressively undermined by growing nationalist and protectionist sentiments, affecting international trade and cooperation,” he said.

Meanwhile, emerging industries, such as in the green and digital domains, and new technologies like artificial intelligence, will disrupt economies around the world.

In response to these broader trends, PM Lee said Singapore must adapt and, at the same time, support those who may be impacted.

Singapore’s survival depends on us staying open and doing business with the world.

“This means continually transforming our industries, enhancing existing capabilities and building new ones as we move into growth markets,” he said, adding that while this might disrupt certain jobs, it would also create new jobs with better prospects for the future.

Tripartism is key in supporting Singaporeans

PM Lee said the Government would keep looking for ways to better support Singaporeans. This can be seen in the progress made via Progressive Wages and the Forward Singapore exercise.

Both initiatives have helped to uplift workers and kickstarted discussions on improving the work prospects of everyday Singaporeans.

These could not have been achieved without strong collaboration among the Government’s tripartite partners, namely the unions (NTUC) and the employers (Singapore National Employers Federation).

“Our model of tripartism is unique and precious . . . With each of us doing our part and all of us working together, I am confident that we will secure a brighter future for Singapore and Singaporeans,” he said.

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Featured image adapted from the Prime Minister’s Office and by MS News.