I REVIEW OF THE ECONOMY ECONOMIC PERFORMANCE IN 1996

Mr Speaker, Sir, the Singapore economy slowed down in 1996 after 3 years of above-potential growth. After 3 boom years, the global electronics industry took some corrections to shed its excessive inventory. The consequential slower growth in regional countries also affected our hub services like shipping and entrepot trade.

As a result, after a strong 11.5% growth in the first quarter of 1996, the economy moderated to 7.6% in the second quarter, fell to 3.3% in the third quarter, before rebounding to 5.8% in the last quarter. For the whole of 1996, we managed a 7% growth.

This slowdown eased the pressures of high growth but has not adversely affected our economic fundamentals. Our labour market remained tight. Real wages grew by 3.4% , slightly lower than a year ago. Inflation was also lower at 1.4% compared to 1.7% in the previous year. Although productivity growth declined to 0.7% and unit labour cost rose by 3.5% , investors remained confident in our sound economic fundamentals, committing a record $8.1 billion in manufacturing investments in 1996, an increase of 19% over 1995.