Singapore economy grew by 1.2% in 2012; technical recession likely say economists

by Imelda Saad

Singapore's growth was slower in 2012 - at 1.2 per cent.

Prime Minister Lee Hsien Loong revealed this in his New Year Message, even as economists point to a likely technical recession.

Mr Lee though added that overall, the country made steady progress.

Growth was weaker in 2012, compared to the 4.9 per cent growth in 2011.

The slowdown is attributed to the weak US, European and Japanese economies.

As well as the difficulty some industries have in hiring the workers they need to grow.

Mr Lee did not give figures for the last quarter but analysts say it likely contracted, pushing the country into a recession - after consecutive quarter-to-quarter contractions.

Q3 contracted 5.9 per cent on a quarter-on-quarter basis.

Asia-Pacific Chief Economist at IHS Global Insight, Rajiv Biswas:

"The number that we're seeing of 1.2 per cent growth in 2012 is reflecting a very weak second half and it looks like the Q4 number will signal a technical recession, which means two quarters of negative growth and this is particularly because of the weakness of the manufacturing exports which have been hit by the EU recession and moderation in growth in China this year."

The overall growth projection for 2013 is 1 to 3 per cent.

Mr Lee also warned of pressures companies will face to raise productivity.

He said the government will support them.

And that only through higher productivity can there be sustained real wage increases for Singaporeans.

Mr Lee pointed to one long-term initiative launched in 2012 - the "Our Singapore Conversation".

This involves Singaporeans coming together to forge a shared vision for the future.

Mr Lee said it's been a productive airing of views, but added the process is also about building consensus (ENEWS: and learning to walk in one another's shoes.).

The next step is to translate the ideals into programmes that improve lives.

One issue where consensus needs to be forged is population.

Fundamentally, Mr Lee said it's about maintaining a strong Singaporean core.

But there are also practical concerns to prevent the population from ageing and shrinking, and to keep the economy competitive.

Through the course of the Singapore Conversation, some Singaporeans have expressed the desire for the country to focus less on material aspirations and more on values of inclusiveness and graciousness.

Mr Lee said the country's population policies cannot just be about numbers. Ultimately, he said it's about the Singapore spirit and the ties that bind the nation.

And perhaps in reference to scandals involving high-ranking civil servants, Mr Lee said Singapore needs capable and committed leaders, who uphold high standards of integrity and set good personal examples.

This is so they have the moral authority to lead the nation.

Mr Lee said the lapses are unfortunate and disappointing.

He added while no system can be perfect, Singapore must do its utmost to run a clean and good government.

This means investigating wrongdoings thoroughly, and putting things right decisively and openly.