Singapore PM: US consumption decline could hurt Asian growth

SINGAPORE (AP) - Singapore's prime minister said Sunday economic growth in Asian countries, including Singapore, could suffer if the recent crisis in western financial markets cuts consumer demand in the U.S.

"In recent weeks, you will have seen turbulence in the financial markets globally and this may affect the U.S. and the European economies, and in that case, it will also affect Asia over the next 3 to 6 months," Lee Hsien Loong said in his annual National Day Rally speech to Singaporeans.

Lee added, however, that even if Asia is affected, the region's fundamentals remain strong. He ruled out the possibility of an Asian financial crisis brewing in the region.

"This is not a financial crisis in Asia. This is a crisis in the advanced countries which has affected us. I believe the mid- to long-term prospects are very good," he said.

Stock markets across Asia tumbled in recent weeks, spooked by a credit crunch and sub-prime woes in the U.S. and European markets. But Friday after Asian markets had closed, the U.S. Federal Reserve cut its key discount rate a half percentage point to 5.75 percent _ a move that quelled investor worries for the time being. The move sent major European stock indexes higher, with Britain's FTSE rising 3.5 percent to 6,064.20.

The Dow Jones industrial average then surged 233.30, or 1.82 percent, to close at 13,079.08 Friday.

Monday in Asia, stock markets in Japan, Hong Kong, South Korea and Taiwan have followed and are on the rise.

Singapore's benchmark Straits Times Index is up 4.5 percent from Friday at 3,271.29 in late morning trade. Friday the index fell as much as 6 percent in intraday trade before ending marginally down by 0.7 percent.

Prior to the Fed's move Friday, analysts had said Asian stock markets were largely driven by panic selling because of the liquidity crisis in western markets.

Last week, Singapore's Ministry of Trade and Industry said the island-state's gross domestic product grew 14.4 percent from the first quarter on a seasonally adjusted annualized basis.

The government also raised its forecast GDP growth to between 7-8 percent, up from an earlier estimate of 5-7 percent.

Lee said his government is looking to grow the economy 4-6 percent on a sustained basis over the next five to 10 years, up from a previous target of 3-5 percent.

Lee also said Singapore will raise its retirement age for workers from 62 to 65 beginning in 2012, and to 67 later.