By Kenny Chee

SINGAPORE could see positive economic growth of 3 per cent next year, said Minister Mentor Lee Kuan Yew yesterday.

This comes after the Ministry of Trade and Industry upgraded its forecast last month for Singapore's growth this year to -2.5 to -2 per cent, from an earlier forecast of -6 to -4 per cent.

Speaking at a tree-planting event at Henderson estate in Tanjong Pagar GRC, Mr Lee said that all countries in Asia had been hit badly by the financial crisis in the United States, after banks there were ruined by unpaid debts, which they had in turn sold to banks in Europe.

Fortunately, Singapore owned banks and financial institutions had not bought these derivatives and were not directly involved, he said.

Mr Lee noted that Singapore's international trade was 360 per cent of its gross domestic product - the highest such proportion in the world.

He cautioned that because Singapore's hinterland is the whole world, "we will not resume high growth for several years until the major economies in the world have recovered".

The US, Europe, and Japan seem to have pulled out of the recession after their governments introduced large stimulus packages to boost the economy.

But the US recovery is expected to be slow and, in turn, so is Singapore's, Mr Lee said.

Experts have warned that countries that depend on exports to the US will no longer be able to do so, as Americans have to spend less to pay their debts.

Those with big populations, like China, India and Indonesia, can raise domestic consumption, but Singapore, with its small population, will need to find other ways to make up for the dip in exports, Mr Lee said.

Fortunately, Singapore has gone into industries that have not been as badly hit by the downturn, such as the pharmaceutical industry, he said.

And it can benefit from a spillover effect from China, India and Indonesia, he added.

For Singapore to continue growing, it also needs to continue bringing in immigrants because its birth rate of 1.28 per couple is low, he said.

So he urged Singaporeans to adjust to and accommodate immigrants. It also needs capable leaders to stay strong, he said.

"The present ministers can last 10 years. By the next election, you will see the nucleus of a new generation (of leaders) - as able, as determined and as committed...

"We are looking for more Members of Parliament like Indranee Rajah, who not only look after you but (also) upgrade your (community) and give people hope."

Ms Rajah, a Member of Parliament for Tanjong Pagar GRC, said that Mr Lee was very kind to recognise the work that she had put in for her residents.

kennyc@sph.com.sg

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