SINGAPORE, Aug 8: Singapore’s economy should grow only between zero and one per cent this year, Prime Minister Goh Chok Tong said on Friday, further lowering the government’s original estimate of between 0.5 and 2.5 per cent.

In a somber speech on the eve of the city-state’s 38th independence day celebrations, Goh cited the devastating effects on the economy of the Severe Acute Respiratory Syndrome (Sars) and tougher competition from within the region.

“Overall, our economy should grow by zero to one per cent for the whole year,” said Goh in the nationally televised speech that focused mainly on the economy.

“Next year, we expect the external conditions to improve some more, and Singapore should see much better growth.”

Goh said gross domestic product shrank 4.2 per cent in the second quarter with the unemployment rate remaining high.

The three months to June shrinkage meant the economy contracted by 1.3 per cent in the first half. For the second half of the year, growth is expected at between 1.3 and 3.3 per cent.

“We have suffered successive blows in the last six years. First the Asian financial crisis. Then the recession in 2001. And this year, Sars,” the prime minister said.

“Sars interrupted our recovery from the recession,” he said.

“Overnight, the number of visitors fell by two-thirds. Our hotels, airlines and taxis emptied out. Restaurants and shops were deserted.”

Singapore’s GDP contracted 2.4 per cent during a recession in 2001, and grew 2.2 per cent last year.

“Now we need that same solidarity and spirit to deal with another challenge — getting our economy healthy and strong again,” Goh said.

“We have faced many storms before and we have always pulled through. This time, our recovery has taken longer than usual because of a series of unfortunate events.

“But I am confident that we can overcome our problems and grow again.”

Goh said signs of a recovery are visible as hotels are filling up and exports are expected to grow further.

Despite the global economic slowdown, the Economic Development Board should be able to attract S$7.5 billion worth of investments in the crucial manufacturing sector this year, just a little short of its target of S$8 billion.

Singapore’s performance in containing Sars boosted investor confidence in the country, he said, but businesses also have asked the government to trim down costs.

“The reason is simple: we are up against competition from lower cost countries,” Goh said, pointing out that for the first time in its history port operator PSA Corp. had to lay off staff to lower trim costs and prevent clients from shifting to neighbouring Malaysia.

Singapore’s future is bright provided that it adopts to the changing landscape, using its reputation for incorruptibility, superb infrastructure, secure environment and educated work-force as its trump cards.—AFP