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SINGAPORE has revised its full-year growth forecast, narrowing the range to between 4 and 5 per cent.
This reflects a less-rosy outlook from the Government's earlier and broader projection of 4 per cent to 6 per cent.
The change was announced by Prime Minister Lee Hsien Loong in his National Day message last night when he also called on Singaporeans to prepare for a 'bumpy year ahead'.
He noted that the last 12 months have been marked by economic uncertainty worldwide. Still, Singapore achieved good economic results, he said, announcing that growth was 4.5 per cent in the first six months.
However, three factors put him in a 'somewhat guarded mood'.
One, the US economic troubles are starting to reach Asia.
Two, South-east Asia has become less prominent for investors, who view China and India as bigger opportunities.
Third, Singapore is battling its worst inflation in 25 years.
Against this backdrop, the growth revision was anticipated by economists like CIMB-GK head of research Song Seng Wun: 'With only 4.5 per cent growth in the bag and a wobbly external environment, it is not a surprise.'
In his message, the Prime Minister sought to balance the solemn mood with a couple of bright spots, and action plans.
He said in his televised message that Singapore can seize opportunities and strengthen its position by acting on three fronts.
First, create wealth by developing the economy. Ahead are major projects such as the integrated resorts and a $6.8 billion solar energy plant, the world's biggest, all pushed in the years when conditions were good.
'These projects will create good jobs, and keep our momentum up despite the uncertainties ahead,' said Mr Lee.
Second, he promised 'further steps' to create a baby-friendly society where infants are a 'natural and important part of life, and where young couples get support in starting families'.
Third, open up the Singapore system progressively, with the Internet now transforming life. 'This is the right way to go,' he said. Singapore will adapt to these changes in the digital world, and 'educate and engage the cyber-citizens'.
But as Singapore opens up, the people must know that 'all freedoms come with responsibilities to uphold social stability and security'.
He urged Singaporeans to focus on these three fronts to secure Singapore's long-term future, and to look beyond immediate problems like inflation.
Inflation is tipped to average at between 6 per cent and 7 per cent this year, said latest official forecasts.
Mr Lee acknowledged that 'some Government policies do raise the cost of living'. He cited increases in the Goods and Services Tax and Electronic Road Pricing.
'But they are essential, otherwise we would not do them,' he said, speaking from the Sri Temasek, the official residence of the Prime Minister at the Istana.
The GST, for instance, finances the Workfare Income Supplement scheme, and there are other help programmes for the poor, elderly and sick, he said.
'Middle-income Singaporeans are getting something too to help tide over this period.'
Despite the uncertainties, PM Lee is confident, saying 'Singapore is in a strong position'.
Agreeing, DBS Bank economist Irvin Seah said: 'The base of the economy has broadened with the last few years of economic restructuring, so this adds stability and helps us weather external volatility.'
Labour chief Lim Swee Say told Singaporeans not to feel disheartened as the country's economic foundations today 'are much stronger than those of the rest of the world'.
But Mr Chia Ban Seng, vice-president of the Singapore Chinese Chamber of Commerce and Industry, wants the Government 'to put a moratorium on various taxes and fees and do its best to keep in check the continued rise in business costs'.
Additional reporting by Kor Kian Beng
