Singapore Prime Minister Lawrence Wong pledged to “redouble efforts” to combat high living costs, including by strengthening social safety nets for the most vulnerable citizens.

“We recognise how rising prices are impacting Singaporeans,” he said on Thursday in his first National Day message since taking over from Lee Hsien Loong in May. While the city-state cannot control global prices, “we can and we have shielded Singaporeans from the worst effects of global inflation by keeping the Singapore dollar strong”.

With cost of living ranked as the top concern among Singaporeans, Wong pledged to boost safety nets and a programme to re-skill workers as part of a strategy to lift incomes and address wealth inequality. That’s especially crucial to win over voters ahead of a general election, which must be held before November 2025.

As finance minister, Wong pitched a budget this year that included S$5 billion for measures including cash payouts and tax breaks, a figure that will reach nearly S$40 billion by the end of the decade.

Wong Thursday outlined plans to help Singaporeans deal with “employment setbacks” and also enhance support for families. Details of the social safety measures will be announced later this month, he said, adding that the government will continue to cushion the impact of inflation with support measures including cash handouts.

While Singapore’s core inflation eased below 3% in June for the first time in more than two years, the city-state saw the pace of sequential economic growth quicken in the second quarter - key to boosting wages.

“In the long term, the key to managing the cost of living is to foster innovation and enhance productivity across our economy,” Wong said. “Then we can expect wages to increase by more than inflation, and improve the overall quality of life for all Singaporeans.”

Singapore’s economy might still face challenges in the second half of the year even after the city-state’s actual year-on-year GDP growth beat consensus forecasts in the first six months, according to a recent report by Bloomberg Intelligence. Those risks include cooling global and domestic demand, including as a result of geopolitical tensions, which could weigh on trade.

“The world is changing dramatically,” Wong said, listing conflicts in Europe and the Middle East, and rising US-China tensions as risks. The two largest economies are “engaged in a strategic rivalry that can undermine peace and stability, especially in this region”.

  - Bloomberg