"The global environment is positive. All the major economies are recovering, especially the US," he said in a Lunar New Year address to the Chinese Chamber of Commerce and Industry.

"In Singapore, business prospects have improved. Companies are hiring workers again and unemployment should go down later this year."

Singapore's unemployment rate surged to 5.9 percent, the highest since 1986, at the end of the third quarter last year, according to latest government data.

The city-state's economy grew a modest 0.8 percent in 2003 but is projected to expand between three and five percent this year.

Lee, who is also the finance minister and chosen successor to Prime Minister Goh Chok Tong, painted a buoyant year for the economy as it emerges from a downturn largely caused by the SARS epidemic in the first half of 2003.

"Now amidst the sound of firecrackers, we usher in the Year of the Monkey. The outlook this year is much brighter, and the Singapore economy is on track for steady growth," he said.

While Singapore still needed to watch how the economy performs in the next few months to be sure it is on a firm footing, Lee said it was encouraging that reports of Severe Acute Respiratory Syndrome (SARS) in China have been only sporadic.

"Equally important, people have reacted calmly and not panicked, so any economic impact should be contained," he said.
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