Singapore has to prepare for slower growth: PM Lee
But technical recession may be avoided for now, says Mr Lee at end of visit to New Zealand
by Imelda Saad Aziz 04:45 AM Oct 10, 2012
WELLINGTON- Contrary to expectations following weak economic data, Singapore may avoid a technical recession for now, Prime Minister Lee Hsien Loong said yesterday.
But it could well be inevitable further down the road as growth slows, said Mr Lee, as he underlined the need to keep the economy strong to provide opportunities for Singaporeans.
The Ministry of Trade and Industry (MTI) had said that the economy shrank by 0.7 per cent between April and June, compared to the previous quarter. Mr Lee suggested that the figure may be revised upwards into positive territory.
The revised figure will be announced on Friday, when flash estimates for third quarter growth will also be made public. Technical recession is defined as two consecutive quarters of contraction.
Speaking to Singapore reporters at the end of a three-day official visit to New Zealand, Mr Lee warned that slow growth means that there is little margin for error. "When you are going for slower growth, and we are expecting slower growth, then the chances of you dipping below zero from time to time will be much greater," said Mr Lee.
He added: "If you are going to make 5, 6 per cent (growth), when you slow down, you slow down to 3 per cent, it's okay. If you're going to make 1, 2 per cent (growth), (when) you slow down, you slow down to 0 or -1, and I think, psychologically, that is a big difference.
"I think that's another reason why we must keep our economy strong, because there's a very big impact on the mood of the people on the confidence of the population and of investors when they see an economy which is able to continue to make progress steadily."
On calls by some Singaporeans for the country to focus less on material aspirations, Mr Lee said Singapore needs to find the right balance between growth, social considerations and quality of life.
He said there also needs to be dynamism and buzz so that there will be opportunities for Singaporeans.
One key challenge, Mr Lee said, is to raise productivity to ensure a steady rate of growth. He noted that many companies here "are finding it difficult finding the workers that they need".
"They can see the business opportunities there, they want to take the contracts and the orders, they want to start up the new outlets, they can't find the workers," said Mr Lee.
"So, does that mean that productivity will go up automatically? No. But it means that there's pressure on them to make the most of workers that they have and to train the workers with the help from all the Government schemes, so that productivity will go up."
Mr Lee added: "There is no magic solution. You can't just turn on the tap and the hot water comes out. You have to work hard at it. There'll be ups and downs and there'll be rough spots, and we are going to get used to not so fast growth as before, but we have to work to achieve that, because you can't just lie back and say, 'I'm working too hard, I have to slow down'."
Earlier this month, official figures showed manufacturing activity contracted for the third straight month last month, raising the likelihood of a recession in the third quarter. The weak Singapore manufacturing data mirrors the slump elsewhere in Asia.
Reply With Quote
