Singapore’s land and labor limits will “increasingly constrain” its economic expansion and the city state must adjust to lower growth rates as compared to the last two decades, Defence Minister Ng Eng Hen said.
The island’s citizen workforce will begin shrinking starting in 2020 for the first time in its history, and the nation needs to improve social services and health care programs to help a larger elderly population, Ng said in prepared remarks for a speech in Parliament today. He spoke as Leader of the House.
“Singapore is at the cusp of transition as we face impending and difficult challenges, particularly from the effects of an aging population coupled with low fertility rates,” Ng said. The island’s Southeast Asian “neighbors with their younger populations, abundant labor and natural resources will grow faster than us and give Singapore stiff competition for investments,” he said
A government push to limit the intake of foreign labor has led to a rising shortage of workers and higher business costs, contributing to price pressures that led Singapore to tighten monetary policy last year by allowing faster currency gains. Hiring constraints, coupled with weak growth in advanced nations, damped last year’s expansion, and the export-dependent economy remains at risk from an uneven U.S. recovery and Europe’s sovereign-debt crisis.
“The external environment remains uncertain with weak U.S., Europe and Japanese economies,” Ng said. “The peace and security of our region is worrisome as tensions continue in the South China Sea, East China Sea and beyond.”
Parliament is due to appoint Halimah Yacob as its new speaker today.
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