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August 10, 2008

Singapore lowers 2008 growth forecast to 4-5%
Singapore has lowered the forecast for this year’s economic growth to 4-5 percent from 4-6 percent, reported AFP late Friday.

AFP quoted Singapore’s prime minister Lee Hsien Loong as warning Singaporeans to brace themselves for a “bumpy year ahead” during his speech on the eve of the country’s National Day.

“We celebrate National Day this year in a somewhat guarded mood. The last 12 months have been a period of economic uncertainty worldwide,” said Lee, 56, noting that the giant US economy is still facing serious problems.

“The housing crisis is adding further stress to its financial system. US consumers are spending less, and that is affecting the whole global economy. The difficulties will probably drag on well into next year before getting better.”

Lee said the economy grew 4.5 percent in the first half from a year ago. Based on first-quarter annual growth of 6.9 percent, Singapore’s gross domestic product likely expanded close to the government’s advance estimate of 1.9 percent in the second quarter.

Singapore’s economy, which had initially been partly buffered by strong Asian economic growth, is now feeling the impact of America’s problems as regional economies are affected, he said

The United States is a major buyer of exports from around the world, including from Asia.
“We must therefore prepare ourselves for a bumpy year ahead,” the prime minister said.

Global investors are looking less at Southeast Asia, the region where Singapore is located, as they focus more on bigger growth opportunities in China and India, Lee said.

With several Southeast Asian states preoccupied with domestic economic and political problems, Singapore must strive hard to maintain its reputation as a competitive economy within the turbulent region, he added.

Inflation -- which had risen to a 26-year high of 7.5 percent in June -- has also worsened the impact of the economic slowdown, the prime minister said.

The trade ministry will release details of second quarter economic growth on Monday. Singapore marks its 43rd year as an independent nation on Saturday.

Lee also addressed social issues which he said mattered to Singapore for the long-term, including the need to produce more babies.

“To secure our long-term future, we also need enough babies to replace ourselves. Year by year, fewer Singaporeans are getting married and those who do are having fewer children,” he said. “We have to take this seriously.”

Singapore had a population of 4.59 million as of last year, including more than one million foreign workers and their families.

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