Singapore GDP grew 1.2% in 2023 but expect less favourable external environment ahead: PM Lee

SINGAPORE: Singapore's economy grew 1.2 per cent in 2023 to avoid a recession, Prime Minister Lee Hsien Loong said in his New Year message for 2024 on Sunday (Dec 31).

However, he pointed out challenges ahead as geopolitical uncertainties continue to weigh on the global economy.

Next year's gross domestic product has been projected to grow by 1 per cent to 3 per cent, although "much will depend on the external environment", he said.

"For some years to come, we must expect the external environment to be less favourable to our security and prosperity," Mr Lee said.

"In our own region, there are tensions and risks over rival claims in the South China Sea, and because of the cross-Strait situation," he added. "These can affect confidence in the region, and hence our growth."

Mr Lee said that climate change will also have an impact on the economy.

"Climate change will pose major challenges for every country. We are already feeling its effects," he said.

"Singapore needs to adapt to and prepare for rising temperatures and sea levels, and to transition our economy to net-zero carbon emissions. It will be costly and demanding."

Mr Lee noted that while a recession was avoided this year, "households are still feeling the pressure of higher cost of living".

"I hope the government's many assistance schemes have helped to relieve the burden on households," he said, adding that "inflation is gradually coming down" and will "hopefully … come down further" next year.

In November, the Ministry of Trade and Industry had said that the economy was expected to grow by around 1 per cent in 2023, narrowing its forecast from a previous range of 0.5 per cent to 1.5 per cent because of subdued external demand.

Despite these headwinds, Singapore has "reason for hope and confidence", Mr Lee said.

"Rapid technological progress, especially in artificial intelligence and robotics, holds great promise for our businesses and people," he said.

"The government will work closely with businesses to upgrade and transform their operations, and with our tripartite partners to support every Singaporean to upskill and reskill, so that all can actively pursue their careers and keep themselves employable and competitive."

Mr Lee added that the government would continue to support lower-income families and vulnerable groups "to enable them to live with purpose and dignity".

"We will continue to build affordable and accessible public housing for Singaporeans, a cornerstone of our social compact," he said.

"To care for our ageing population, we are enhancing our physical infrastructure and social safety nets, and transforming our healthcare system with Healthier SG and Age Well SG. All these, and more, form part of the blueprint for a refreshed social compact."

Mr Lee also spoke about the Forward Singapore agenda, which he described as "ambitious", especially "in an era of rapid external and internal change".

"Many larger societies have become divided and weakened because difficult issues were not tackled directly and effectively, rival interest groups jostled against one another and leaders put their own interests above the nation's," he said.

"As a small red dot, Singapore cannot afford to make the same mistakes and suffer the same consequences. We must work ever harder to keep our society together, and strengthen our sense of shared identity and nationhood."

Launched in June 2022, the Forward Singapore exercise was led by Deputy Prime Minister Lawrence Wong and other fourth-generation (4G) political leaders to review and refresh Singapore's social compact.

This has been described as "the glue that holds society together, the shared understanding of our roles and responsibilities towards each other, and our shared values and aspirations as a people".

LEADERSHIP TRANSITION

Continuing his message, Mr Lee called on Singaporeans to give their "full support" to Mr Wong and his team as he takes over as Prime Minister next year.

"This is not the first time we are having a leadership transition. But transitions are always delicate. Singapore will come under close scrutiny. People near and far are watching to see how the new leaders bond with Singaporeans, and whether our small nation can remain successful and exceptional," he said.

"I urge Singaporeans to stand together, give your full support to Lawrence and his 4G team, and work with them to build a nation that is vibrant and inclusive, fair and competitive, and resilient and united."

"This is how we have come through successive crises and done well, and this is how we must surmount future challenges which are bound to come."

At the biennial People's Action Party (PAP) convention in November, Mr Lee said that he would hand over leadership to Mr Wong before Singapore's next General Election, which has to be called by November 2025.

He added that "if all goes well", the leadership transition would take place by the PAP's 70th birthday, which is on Nov 21 next year.

Mr Wong was endorsed as the leader of the party's 4G team last year.

ISRAEL-HAMAS WAR

Mr Lee also addressed the Israel-Hamas war in his message, commending Singaporeans for their response to the conflict.

"Much as we try to insulate ourselves from problems elsewhere, inevitably from time to time we in Singapore will feel for the troubles of others. It is a consequence of our shared humanity," he said.

"I am glad on this occasion Singaporeans have again responded in a compassionate and practical manner – expressing our views while upholding our national interests and social cohesion, and contributing generously to humanitarian aid for those in need, particularly in Gaza."

Mr Lee expressed his gratitude to religious and community leaders who have stood beside the government to offer advice and support social cohesion during a "fraught moment".

"We have painstakingly built up our racial and religious harmony over decades as a fundamental basis of Singaporean society," he said.

"We must continue to approach potentially divisive issues like the Israel-Hamas conflict with tolerance and respect towards one another's views."

Mr Lee concluded his message with a call for Singaporeans to "face 2024 invigorated and confident, as one united people".

He said: "The future may be uncertain, but our path is clear. I call on every Singaporean to come together to fulfil our aspirations, and secure a bright future for Singapore."