SINGAPORE (Reuters) - Festooned with countless red and white flags, Singapore launched an extravagant celebration of its 50th anniversary on Sunday, an occasion of national pride the city state's ruling party is expected to exploit to call an election next month.

It will be the second time this year that Singaporeans have come together to reflect on the extraordinary success of a tiny nation, after they mourned the death of first prime minister Lee Kuan Yew in late March.

An island of 5.5 million people that sits just north of the equator, what was a post-colonial backwater at independence from Malaysia in 1965 is now a global business hub whose economic and social model is the envy of nations around the world.

The government intends to showcase its success in an elaborate parade that will include a flypast by fighter jets and fireworks for an audience of 200,000 as well as millions watching on television from their living rooms.

"At 50 years, as we stand at a high base camp, we look back and marvel how far we have come. We are grateful to those who made it happen," Prime Minister Lee Hsien Loong said in a televised speech on the eve of the national day.

"From this base camp, we can also look forward to new peaks ahead. The journey ahead is uncharted. But we must press on, because we aspire to do better for ourselves and our children."

Lee spoke at the Victoria Concert Hall, where his father, the country's first prime minister, Lee Kuan Yew, launched the People's Action Party in 1954. The party that has remained in power since independence.

The government has granted an extra day of public holiday, and handed out commemorative tote bags stuffed with national flags along with snacks and games from Singapore's yesteryear.

Regional leaders attending the festivities will include Malaysian Prime Minister Najib Razakand Australian Deputy Prime Minister Warren Truss.


The official logo for the celebration is a red dot, a symbol of pride and defiance since the 1990s when an Indonesian leader was reported to have referred to Singapore dismissively as "a little red dot" on the map. The image, with "SG50" in white characters, is ubiquitous, adorning banners, buses, cakes and a host of goods in shops.

A recording of Lee Kuan Yew reading the Proclamation of Independence, the document that announced Singapore's separation from Malaysia, was played on radio and television channels at 9 a.m.

Prime Minister Lee, is widely expected to call the next election as early as September.

His party suffered its worst showing at the polls in the last parliamentary election in 2011 due to discontent over issues from a widening wealth gap, sky-rocketing property prices and an influx of foreign workers.

Political analysts expect Lee's party to win more votes this time, in part thanks to the patriotism and feelgood factor of the anniversary celebrations but also the government's efforts to address issues irking the public.

Still, when the banners are taken down, Singapore will return to debates over how to keep the economy growing while combating a low birth rate, anger over prices and a backlash over many years of liberal immigration policies.

(Additional reporting by Saeed Azhar and Natasha Howitt; Editing by John Chalmers, Robert Birsel)