MANAGING SUSTAINABLE ECONOMIC GROWTH

The state of the economy today is totally different from what it was when the Government implemented various cost cutting measures in 1986 to help bring the economy out of the recession. The expansion in 1984 was largely fueled by the boom in the construction sector which accounted for only 10% of the economy, but contributed one-third of GDP growth. This was unsustainable. Growth is now more broad based with manufacturing and services providing the twin engines of growth.

Our challenge now is to sustain the economy on a path of steady, balanced and sustainable growth. To do so we cannot artificially depress costs as that would distort the price mechanism and result in misallocation of resources. At the same time, we need to be vigilant over our competitiveness. We must not push the economy into a recession as a result of loss of competitiveness. For an open economy like Singapore, competitiveness is vital. Barring a world wide recession, we will continue to grow if we remain competitive.