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International relations

Singapore's Lee sounds alarm over trade tensions

US-China feud makes it harder 'to be friends with both,' leader warns

The government forecasts GDP to grow between 1.5% and 3.5% in 2019, said Singaporean Prime Minister Lee Hsien Loong, seen here addressing the 33rd ASEAN summit in November.   © Reuters

SINGAPORE -- Singaporean Prime Minister Lee Hsien Loong in his New Year's message expressed concern that the U.S.-China trade war will force others to choose sides.

"These tensions will cause problems for the world, and make it harder for countries to be friends with both," Lee said in the message released by the Prime Minister's Office on Monday.

His remarks give a glimpse into the difficulty of maintaining trade-dependent Singapore's diplomatic balancing act, with close ties to both Washington and Beijing.

Lee touted Singapore's economic strength during 2018. "Our economy grew steadily at 3.3% -- close to 2017, and above our expectations," he wrote.

But there are "major uncertainties in the global economy, with growing trade conflicts, nervous financial markets and signs of slowing growth," Lee warned. Singapore expects growth of 1.5% to 3.5% for 2019, the message said.

Singapore and neighbor Malaysia have been at odds over maritime and airspace boundaries as well as a 99-year water supply agreement since Malaysian Prime Minister Mahathir Mohamad returned in a historic electoral upset this past May.

Mahathir has suggested renegotiating the agreement, which the city-state relies on for most of its water needs.

"We will deal with all these matters calmly and constructively," Lee said. "Singapore and Malaysia must manage specific problems, however difficult, while preserving the overall relationship."

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