SINGAPORE – Prime Minister Lee Hsien Loong said on Sunday Singapore’s economy avoided recession and grew 1.2% in 2023, but warned that geopolitical risks will weigh on growth next year.
The economic performance of wealthy city-states is often seen as a barometer of the global environment because of their dependence on international trade.
“This year we achieved 1.2% growth and avoided a recession,” Lee said in his New Year’s address.
Growth next year is expected to be 1.0-3.0%, but “a lot depends on the external environment,” he added, pointing to the continued war in Ukraine and the conflict between Israel and Hamas. .
The resumption of air travel after the coronavirus pandemic is boosting domestic growth, while weak global export demand is hurting the economy.
“We must expect the external environment to become unfavorable for our security and prosperity in the coming years. Geopolitical uncertainty will continue to weigh on the global economy,” he said. .
“Tensions and risks exist in our region due to competitor claims in the South China Sea and cross-strait situations. These can impact regional confidence and, in turn, our growth.”
read: Singapore lowers Q4 GDP, leaves 2023 forecast unchanged
Maritime tensions have escalated recently after China and the Philippines swapped responsibility for a series of incidents, including ship collisions in the area.
Mr Lee also cited climate change as another challenge for the low-lying island nation.
“We are already feeling the effects,” he warned.
“Singapore needs to adapt and prepare for rising temperatures and sea levels, and move its economy to net-zero carbon emissions. That will be expensive and demanding.”
read: Singapore’s Defense Secretary says war in Asia will be far more damaging than Ukraine war
Lee, who has been prime minister since 2004, called for unity as he prepares to hand over leadership next year to Lawrence Wong, who is also deputy finance minister.
“This is not the first time we have had a change in leadership. But transitions are always delicate,” he said, adding that “whether Singapore can succeed and remain exceptional” will be “subject to intense scrutiny.” I will accept it,” he added.
If Wong becomes prime minister, it will be the second time since Singapore gained independence in 1965 that the prime minister is not a member of the Lee family.
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Lee’s father, Lee Kuan Yew, was the country’s first prime minister.