Singaporeans optimistic about economic rebound

Singapore's struggling economy is on the rebound and should grow by between 3 percent and 5 percent next year but the unemployment rate will get worse before improving, Deputy Prime Minister Lee Hsien Loong said yesterday.

"Barring any unexpected shocks, our very preliminary estimate is that in 2004 the economy should grow 3 to 5 percent," said Lee, who is also finance minister and chairman of the Monetary Authority of Singapore, the central bank.

Lee cited an improving global economic outlook, especially in the US, as the main reason for his upbeat assessment.

Singapore's economic fortunes are highly dependent on trade, making the city-state vulnerable to any deterioration in the global environment.

Lee said the economy would rebound in the third quarter of this year after a terrible second quarter in which it was buffeted by SARS.

"The second quarter was bad but the third quarter will make up lost ground," Lee, said, adding the economy was "on track" to achieve the government's projected growth forecast of zero to 1 percent for this year.

Prime Minister Goh Chok Tong, in Bali for the ASEAN summit, was even more optimistic in comments reported yesterday in which he said this year's economic growth could exceed the official target.

"It's possible," the Business Times quoted Goh as telling reporters on Monday when asked if the economy could grow more than 1 percent this year.

Lee warned, however, that the improving economic situation would not lead to an immediate improvement in Singapore's unemployment rate, which is at near 20-year highs.

"Growth will create new jobs and bring down unemployment but only after a lag," Lee, who was speaking to union delegates, said.

"The unemployment rate will worsen before improving -- [it] was 4.5 percent in June; expect it to reach or exceed 5.5 percent by end of year."