Delivering his traditional pre-National Day address on Sunday night, Goh, 63, said it was the right time to stand down for his long-serving deputy, Lee Hsien Loong, 52.

"I am very happy that I can leave the office of prime minister at a time of my own choosing. I do so with full confidence about Singapore's future," said Goh, who will officially hand over power to Lee on Thursday.

Dressed formally in a blue suit and red tie for the televised address, Goh announced the nation's economy was expected to grow eight-nine percent this year, up from the previous official forecast of 5.5-7.5 percent.

"I have piloted Singapore for nearly 14 years. Everything is in good working order... Now is a good time for me to hand over the controls to a new captain and his crew," he said.

Goh recalled a statement he made when he took over from Lee's father and the nation's first prime minister, Lee Kuan Yew, in 1990.

"I pledged to ensure that Singapore thrives and grows after Mr Lee Kuan Yew... to build a nation of character and grace where people live lives of dignity and fulfillment, and care for one another," he said.

"It has been 14 years since I made that pledge. Though this National Day message is my last, I address you with a happy heart."

Aside from its economic strength, Goh said Singapore had developed on the social front.

"Our society is more compassionate, open and gracious... as a people, our bonds have deepened. As a nation we are maturing. We are now more confident of who we are and what we stand for," he said.

Goh also highlighted what he said were the benefits of Singapore's political system, which has allowed the People's Action Party to rule virtually unchallenged throughout the nation's 39 years of independence.

Through measures such as multiple seat constituencies, a system that favours the biggest and best organised party, the PAP holds all but two seats in parliament despite winning 75.3 percent of the vote in the last elections in 2001.

The younger Lee has also been groomed as the next prime minister for many years, having served as deputy premier throughout Goh's reign, as well as central bank chief for the past six years and finance minister since 2001.

"Planned, orderly transition is what distinguishes Singapore," Goh said.

"In other countries the politicians exploit the divisive forces in society to get elected and, in the process, pull their countries apart. I call this the 'politics of dissension and divergence'.

"In Singapore, the political leaders do not fight for personal power or gain. Instead they mobilise the society's energies for the nation's collective interest. This 'politics of consensus and convergence' is the best way forward for us."

Goh and the elder Lee, who will turn 81 next month and is still a powerful force in Singapore politics, have previously said they will remain in Cabinet in advisory roles.

Goh said he was confident the younger Lee was capable of leading Singapore, but said he faced many challenges as society undergoes "fundamental changes".

"There are fewer babies and more old people. He will have to manage the rising expectations of the younger generation," he said.

"Many more Singaporeans will live and work overseas. He must make sure that their hearts continue to be Singaporean."

On the economic front, Goh said Lee must make sure Singapore continues its restructuring efforts to retrain older, less-educated workers as lower-skilled jobs continue to migrate to other countries in the region.
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