Singapore is poised for a smooth leadership transition with the promise of political stability allowing the city-state to remain as one of the world's key finance and trade hubs, analysts say.

Singapore's Prime Minister Lee Hsien Loong said on Sunday that he is handing the leadership of the ruling People's Action Party to Deputy Prime Minister Lawrence Wong within 12 months "if all goes well".

Wong would lead the PAP in the next general election, due by November 2025.

"There is no reason to delay the political transition further," Lee said at the PAP's biennial convention. "I intend to hand over (the PAP's leadership) to ... Lawrence before the next (general election)."

The PAP has led Singapore for six decades and is expected to remain in power, with Wong to become the country's fourth prime minister since independence in 1965.

Mustafa Izzuddin, a senior international affairs analyst at Solaris Strategies Singapore, sees a "smooth and seamless" leadership transition. Maintaining a stable political environment in Singapore would preserve business and investor confidence at a high level, he said.

James Chin, professor of Asian Studies at the University of Tasmania in Australia, said Singapore's political model is "based on predictability and stability".

"(Singaporeans) don't like surprises in the system," Chin said.

He describes the PAP as the "most successful political party" in Southeast Asia, noting that under its leadership, Singapore has become the only First World country in the region.

Only external events can prevent a smooth transition of power in Singapore, Chin said.

Lee, 71, is the eldest son of Singapore's founding prime minister Lee Kuan Yew, who is widely credited for the country's success.

Lee had planned for a leadership transfer before his 70th birthday, but had to postpone the move because of the COVID-19 pandemic.

Alicia Garcia Herrero, chief economist for the Asia-Pacific at French investment bank Natixis, said Wong's popularity and impressive performance at the height of the pandemic can help secure more votes for the PAP and serve as a way for Singapore to move forward amid changing geopolitics.

This is a time for soul-searching for Singapore, and the country needs "very strong leadership "amid a rising rivalry among global powers, Garcia Herrero said.

"I think Wong is the best they (the PAP) could find," she said.

Mustafa of Solaris Strategies said that under Wong, Singapore may have a "different style of political leadership that is linked to the personality of the individual at the helm".

Such leadership, he said, is "more aligned with the younger generation of Singaporeans as evidenced by the whole-of-society Forward Singapore domestic initiative".

The Forward Singapore road map, which Wong launched last month after 16 months of collecting feedback, aims to create a more equitable and thriving Singapore under his fourth-generation leadership team.

Wong said that the "Singapore Dream" has gone beyond attaining material success, with Singaporeans also aspiring for "fulfillment, meaning and purpose in what we do".