PART I - REVIEW OF THE ECONOMY ECONOMIC PERFORMANCE IN 1994

Mr Speaker, Sir, the Singapore economy grew by 10.1% in 1994. Growth was broad-based and all major sectors did well. The manufacturing sector grew by 12.9% with strong growth across a broad spectrum of industries. Growth in the financial and services sector was lower than in 1993 because of significantly lower stockmarket turnover.

The commerce and transport & communications sectors turned in creditable performances on the back of strong regional growth and stronger trade and investment linkages in the region. The construction sector saw double-digit growth due to the strong pipeline of contracts awarded in 1992 and 1993.

Inflation remained low, at 3.6%, as domestic cost pressures were contained by good productivity growth while imported inflation was mitigated by the strength of the Singapore dollar. The introduction of the 3% Goods and Services Tax had a smaller than expected impact on inflation due to keen competition in the retail sector.

The two years of double-digit growth in 1993 and 1994 were underpinned by strong productivity growth which averaged 6.0% in the two years. As a result, the Unit Labour Cost index for the manufacturing sector declined in 1993 and 1994.