(Bloomberg) -- Singapore's economy expanded 3.5 percent this year, more than double the initial government forecast as the country benefited from the global economic upswing, Prime Minister Lee Hsien Loong said in his New Year message Sunday.
Lee said the city-state would press on with economic restructuring and infrastructure projects such its fifth airport terminal as well as review healthcare policies to prepare for an aging population.
"All these are essential investments in our future. They require time and resources, and will stretch way beyond this term of government. We have to plan well ahead for them," Lee said in a statement released by his office.
Singapore's 2017 growth comes at the top end of the most recent trade ministry prediction of 3 to 3.5 percent and compares with the median 3.3 percent forecast in a Bloomberg survey. The government is due to release preliminary gross domestic product figures for the fourth quarter on Jan. 2, with a Bloomberg survey of economists predicting annualized growth of 1.6 percent from the previous three months.
Steady growth in the export-reliant economy has raised the possibility of fiscal and monetary policy tightening in the coming year. The Monetary Authority of Singapore is forecasting growth of 1.5 percent to 3.5 percent in 2018.
DBS economist Irvin Seah expects growth to moderate to 3% in 2018 but adds that this shouldn't be seen as "a negative thing" as it shows Singapore's economy "shifting from a recovery to a normalized profile".
Prime Minister Lee also said Singapore's external environment would remain uncertain in 2018, citing tensions on the Korean Peninsula as well as terrorism and a U.S. foreign policy approach that remains "yet to be fully articulated".
"We hope to keep relations with our immediate neighbors steady as they gear up for elections – Malaysia this year, and Indonesia the next," Lee said.
To contact the reporters on this story: Krystal Chia in Singapore at kchia48@bloomberg.net, Alfred Cang in Singapore at acang@bloomberg.net.
To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net, Sebastian Tong at stong41@bloomberg.net.
©2017 Bloomberg L.P.
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