SINGAPORE’S economy grew 1.2 per cent in 2023, and is expected to grow by 1 to 3 per cent in 2024, “but much will depend on the external environment”, said Prime Minister Lee Hsien Loong on Sunday (Dec 31) evening in his annual New Year Message.

The external environment will remain challenging not just in 2024 but for several years, he warned, even as he highlighted reasons for hope and reiterated the government’s commitment to care for its people.

The new year will also see Deputy Prime Minister Lawrence Wong taking over as prime minister, noted PM Lee.

“This is not the first time we are having a leadership transition. But transitions are always delicate. Singapore will come under close scrutiny,” he said.

“People near and far are watching to see how the new leaders bond with Singaporeans, and whether our small nation can remain successful and exceptional.”

He urged Singaporeans to give their full support to Wong and his fourth-generation leadership team, working with them “to build a nation that is vibrant and inclusive, fair and competitive, and resilient and united”.

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“This is how we have come through successive crises and done well, and this is how we must surmount future challenges which are bound to come,” he said.

A challenging year

PM Lee noted that 2023 “was a challenging year”, with the international environment remaining troubled.

Underlying tensions remain between the US and China, even though relations have stabilised after a recent meeting of their leaders in San Francisco. Russia’s war in Ukraine “is at a strategic stalemate with no resolution in sight”.

Most recently, thousands of civilians have been killed and maimed in Hamas’ attack on Israel and Israel’s ferocious military response, he said.

“The horrific and continuing human suffering has aroused revulsion and anger around the world. In Singapore, people of all races have expressed their anguish and concern, with Muslim Singaporeans understandably feeling this most acutely.”

“Much as we try to insulate ourselves from problems elsewhere, inevitably from time to time we in Singapore will feel for the troubles of others,” he added. “It is a consequence of our shared humanity.”

PM Lee said he was glad that Singaporeans have responded “in a compassionate and practical manner”, expressing their views while upholding the country’s national interests and social cohesion, and contributing to humanitarian aid, particularly in Gaza.

“I am especially grateful that at this fraught moment, religious and community leaders have stood beside the government to counsel wisdom and support our social cohesion.”

Noting that racial and religious harmony has been built up over decades “as a fundamental basis of Singaporean society”, he said: “We must continue to approach potentially divisive issues like the Israel-Hamas conflict with tolerance and respect towards one another’s views.”

That, said PM Lee, is how to honour the ideals of founding Prime Minister Lee Kuan Yew and his team: a fair and just society with equal opportunities; “a thriving economy built on meritocracy and hard work”; and an “endearing home” for all Singaporeans.

The Presidential Election, won decisively by President Tharman Shanmugaratnam, was a good sign of Singapore’s progress “towards becoming one nation, regardless of race, language or religion”, he added.

In 2023, Singapore “also learnt to live with Covid-19”, said PM Lee. The country formally emerged from the pandemic in February with a return to Dorscon Green, and economic and tourism activity has picked up.

The country has avoided a recession with gross domestic product (GDP) growth of 1.2 per cent, but households still feel the pressure of higher living costs, even though inflation is easing, he said.

“Next year, MTI (Ministry of Trade and Industry) projects our GDP to grow by 1 to 3 per cent, and inflation hopefully to come down further, but much will depend on the external environment,” he said.

A troubled world

“For some years to come, we must expect the external environment to be less favourable to our security and prosperity,” warned PM Lee.

Firstly, the global economy will continue to be weighed down by geopolitical uncertainties. Close to home, there are tensions and risks over rival claims in the South China Sea, as well as over “the cross-strait situation”, he said, referring to relations between mainland China and Taiwan.

“These can affect confidence in the region, and hence our growth,” said PM Lee.

Secondly, climate change will pose major challenges for every country, he noted. “Singapore needs to adapt to and prepare for rising temperatures and sea levels, and to transition our economy to net-zero carbon emissions. It will be costly and demanding.”

But Singapore also has reason for hope and confidence, he added.

“Rapid technological progress, especially in artificial intelligence and robotics, holds great promise for our businesses and people,” he said, adding that the government will help businesses upgrade and transform, and support Singaporeans in gaining and updating their skills.

“At the same time, we must always care for others in our community, and help those in greater need than ourselves,” he said.

He gave reassurance that the government will keep uplifting the lower-income and vulnerable; building affordable and accessible public housing; and caring for the ageing population.

“All these, and more, form part of the blueprint for a refreshed social compact,” he said. This is under the Forward Singapore agenda, with seven policy shifts developed through a national consultation exercise.

Singapore will have to achieve this ambitious policy agenda in “an era of rapid external and internal change”, noted PM Lee.

“Many larger societies have become divided and weakened because difficult issues were not tackled directly and effectively, rival interest groups jostled against one another, and leaders put their own interests above the nation’s,” he said.

Singapore cannot afford to make the same mistakes, and must instead work even harder to keep society united and strengthen the sense of shared identity and nationhood.

“Let us face 2024 invigorated and confident, as one united people. The future may be uncertain, but our path is clear,” he concluded.