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Saturday, August 14, 2004

PM Lee Hsien Loong: A new chapter 

Lee Hsien Loong was sworn in as prime minister on Thursday, marking a new chapter in the history of Singapore.

In his inauguration speech, Mr Lee called on Singaporeans to help him create “a country we are proud to call our own”.

He spoke about the need for leadership renewal and for the government to stay in tune with the needs and aspirations of the majority of Singaporeans who were born after independence in 1965. “Leadership succession will be one of my top priorities.”

He also re-affirmed the path toward greater openness. “Our people should feel free to express diverse views, pursue unconventional ideas, or simply be different...Ours must be an open and inclusive Singapore.”

Mr Lee touched on the economy in an optimistic tone. “Our prospects are brighter than ever before. Our economy is growing strongly again.”

Of course, that is a view that is consistent with what he said last week about Singapore’s economic restructuring (see my post “Restructuring: Too early for self-congratulation”)

Not everyone is as confident though. For example, Morgan Stanley’s Daniel Lian wrote that while he is raising his 2004 GDP growth forecast from 6.8 percent to 8.3 percent, he thinks that Singapore’s economy is at the mercy of global demand.

Singapore: Happier Days Here to Stay?
We are raising our full-year 2004 GDP growth forecast from 6.8% to 8.3% on the back of stronger 1H04 growth and steady 2H04 growth...

Until the external economy becomes much larger and more profitable, the economy will remain at the mercy of global demand. This is why the just-arrived happier days in Singapore may or may not stay beyond 2004. Global demand is already threatened by the concomitant arrival of three macro wildcards: the China slowdown, the energy crisis and global monetary tightening following hikes by the Fed. The US economy has clearly decelerated in the second quarter, and poor job creation in both June and July raises fears that the largest growth engine of the global economy could falter in 2H04. Singapore faces uncertain prospects in 2005, in my view.
It’s an economist’s prerogative to be pessimistic. A political leader has no such luxury.

“There are plenty of opportunities for all of us if we make the effort, take calculated risks and stay united,” said Mr Lee on Thursday. “As a nation, we are stronger, more cohesive, and have more resources than ever before. The future is ours to make.”

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