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Thread: PM upbeat about S'pore economy

  1. #1
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    Default PM upbeat about S'pore economy

    http://www.straitstimes.com/Prime%2B...ry_232795.html

    May 1, 2008

    PM upbeat about S'pore economy

    He is confident Singapore will be able to weather uncertain global outlook

    By Sue-Ann Chia


    SINGAPORE is sailing into choppier waters amid uncertainty in the global economy, but Prime Minister Lee Hsien Loong is confident of Singapore's economic prospects.

    In his annual May Day message, Mr Lee sketched out the uncertain outlook due to the financial crisis in the United States.

    But he maintained: 'However the US financial problems play out, I am confident of our ability to cope...our economic fundamentals are sound and we are in a strong position.'

    Buoyant industries such as tourism, construction and marine engineering will buffer Singapore from the effects of a US recession, he said.

    The economy is still on track to grow by 4 per cent to 6 per cent this year. The job market is also expected to be full of jobs chasing workers.

    'In both manufacturing and services, many vacancies are waiting to be filled,' the Prime Minister said.

    Latest job figures released yesterday buttress this point.

    They show that a record 68,400 jobs were added to the economy in the first three months of the year, exceeding the 62,500 jobs created in the previous quarter and 49,400 in the same quarter last year.

    Still, despite the job boom, the unemployment rate climbed from 1.7 per cent in December to 2 per cent in March.

    HSBC Bank economist Robert Prior-Wandesforde attributed this phenomenon to an expanding pool of job seekers, possibly a result of more foreigners seeking jobs here.

    In his speech, Mr Lee also urged workers and employers to aim for 'sustainable' wage changes this year, in anticipation of a year ahead that will be 'much more challenging' than 2007 had been.

    'Realistic settlements will address the concerns of workers, and yet allow companies to respond quickly to sudden changes in the economic environment,' he said.

    For now, the economy is still doing well although 'dark storm clouds have gathered'.

    Pointing to the sub-prime mortgage loan crisis in the United States, Mr Lee said: 'We must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse.'

    Addressing the hot issue of rising inflation, Mr Lee said Singapore cannot shield itself completely from this worldwide phenomenon.

    But the strong Singapore dollar has helped to maintain the purchasing power of workers' salaries, he noted.

    The Prime Minister also assured the people about the food situation here.

    Singapore has enough supplies of food, notably rice, and 'we can buy what we need from many sources', he said.

    Also, help will be given to those struggling to cope with the higher cost of living.

    Relief measures from the Government total $3 billion, ranging in form from tax rebates and Medisave top-ups to the GST offset package and Growth Dividends given to every Singaporean from the last Budget surplus.

    The first payout of the Growth Dividends was yesterday, with a second due on Oct 1.

    Noting that Singapore's strength is the strong cooperation among unions, employers and the Government, Mr Lee said this enabled them to take a 'rational approach' and act in Singapore's collective best interest.

    PM Lee added: 'The external turbulence will put our solidarity under stress.

    'But we must not end up arguing among ourselves, or, worse, quarrelling over how to divide what we have, or else we will all be worse off.'

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  2. #2
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    Default Re: PM upbeat about S'pore economy

    http://www.straitstimes.com/Review/O...ry_232829.html

    May 1, 2008

    PRIME MINISTER'S MAY DAY MESSAGE

    Prepare for external turbulence


    LAST year was a good year for Singapore and its workers. The economy grew robustly, many jobs were created and workers enjoyed good wage settlements. In unionised companies, bonuses were the highest since 1990. The mood was upbeat.

    This year will be much more challenging. Our economy is still doing well, but dark storm clouds have gathered. The sub-prime mortgage loans crisis in the United States has become a much broader problem. A US recession has probably already started. The question is how long, and how severe, the downturn will be.

    The US government has acted boldly to stabilise the economy. They hope growth will be back on track by the second half of this year. But there is a possibility that the financial problems will worsen, and push the US economy into deeper trouble. Then Europe and Japan would be more seriously affected, and the impact on Asia and Singapore much more severe. This is one big uncertainty that we must be prepared for.

    Our first priority is to keep the economy competitive and growing. This means continually upgrading and diversifying the economy. We are strengthening our ties with the vibrant Asian economies and tapping new areas of growth. Industries like tourism, construction and marine engineering continue to do well, and will buffer us from the effects of a US recession. We still expect to grow by 4-6 per cent this year. But we must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and the ability to do so.

    With continued growth this year, the labour market will remain tight. In both manufacturing and services, many vacancies are waiting to be filled. As major projects like the integrated resorts come on stream, many more jobs will be created, from front-line operations to supervisory and managerial positions.

    In this environment, the vast majority of workers with useful skills and qualifications will have no difficulties getting a job. They should take advantage of the many opportunities for continuous education and training to refresh their skills and knowledge.

    But older, low-wage workers remain vulnerable. They are less nimble in learning new skills and need more structured training. The Government is doing all it can to help them. We are working with the NTUC to help older workers upgrade their skills, become more employable and do better for themselves. Through the Workfare Income Supplement, we are rewarding those who make the effort by topping up their takehome pay and CPF savings.

    Another major issue is the rising cost of living. Like other countries, Singapore is affected by higher global inflation. We cannot insulate ourselves completely from worldwide price increases. However, the policy of the Monetary Authority of Singapore to keep the Singapore dollar strong has moderated the impact of imported inflation.

    Singaporeans are understandably concerned by the recent sharp increases in food prices, including essentials like rice. We need not worry about a food shortage, because we have adequate supplies and can buy what we need from many sources. At the same time, we can and will directly assist those who are adversely affected by the higher cost of living. This is why this year's Budget included the Growth Dividends, personal income tax rebates, Medisave top-ups and many other relief measures, targeted especially at lower- and middle-income Singaporeans. Together with measures such as the GST offset package, the Government will be giving out more than $3 billion to Singaporeans this year.

    Low-wage workers have already received their Workfare Income Supplements. On April 30, all Singaporeans received their first payout of Growth Dividends. A second payout will come on Oct 1. Altogether, a low-income family living in a three-room HDB flat can expect benefits of around $5,000 this year, far larger than the increase in their cost of living due to higher inflation. Middle-income families will also enjoy benefits that will offset the increased cost of living.

    I hope that workers and employers will take into account these important factors in their wage settlements this year. They should aim for sustainable wage adjustments, and put increases into variable bonuses as far as possible to make our wage structure more flexible. Realistic settlements will address the concerns of workers, and yet allow companies to respond quickly to sudden changes in the economic environment.

    Singapore's great strength in tackling these challenges is the strong tripartite cooperation we have built up over the years. Because of the mutual trust among tripartite partners, we are able to take a rational approach.

    We must do our best to consolidate and strengthen this partnership. The external turbulence will put our solidarity under stress. But we must not end up arguing among ourselves or, worse, quarrelling over how to divide what we have, or else we will all be worse off.

    NO FOOD SHORTAGE

    Singaporeans are understandably concerned by the recent sharp increases in food prices, including essentials like rice. We need not worry about a food shortage, because we have adequate supplies and can buy what we need from many sources.

  3. #3
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    Default Re: PM upbeat about S'pore economy

    http://www.businesstimes.com.sg/sub/...77430,00.html?

    Published May 2, 2008

    Slowdown may stretch into next year: PM Lee

    For S'pore, much depends on the shape of the US downturn - whether it's V, U or L

    By CHUANG PECK MING


    (SINGAPORE) To the eternal optimists who think that the Singapore economy will rebound from its lean patch in the months to come, Prime Minister Lee Hsien Loong offered a sobering projection: he expects the slowdown to continue into next year.

    While the economy is on track to hit 4-6 per cent growth this year, Mr Lee sees its momentum slowing in the next few quarters as the United States economy limps along, dragged down by still-unfixed sub-prime mortgage problems.

    And whether it's a V-shaped or U-shaped downturn in the US, it could extend the slowdown in Singapore's economy into 2009, Mr Lee told some 1,500 unionists yesterday at a National Trades Union Congress May Day Rally.

    'The first quarter is good,' he said. 'Second, third, fourth quarters - prepare ourselves that it will slow down. And the slowdown may last into next year.'

    It could be worse if the US falls into an L-shaped economic trajectory - the gloomiest scenario, when there is a severe and extended downturn in the US, like the decade-long recession Japan went into in the 1990s.

    'If that happens, then America is in trouble,' Mr Lee said. 'So too Europe, so too Japan. And Singapore will be caught up in this and we will be in serious difficulties too.'

    But he noted that most analysts don't think this is on the cards.

    The best scenario for the US is a V-shaped downturn - a quick recession followed by a quick rebound - which is also the best scenario for Singapore, Mr Lee said. 'But it is hoping for the best'.

    He said the US could easily slip into a U-shaped downturn because its underlying housing problems remain unsolved. The actions taken so far have only postponed the problems into the future.

    'The property prices have to go down further,' Mr Lee said. 'When they go down, the banks will have more problems. When the banks have problems, they shrink. That will cause the economy to have more problems.'

    In a U-shaped downturn, the bottoming will last longer and the US economy will take some time to sort itself out - perhaps until 2009, according to him.

    'This could well happen and then Singapore too will be slowed down significantly,' Mr Lee warned.

    'But whatever it is, we have to stay on our guard and stay prepared,' he said. 'Overall, I would expect V-shaped if we are lucky (or a) U-shaped downturn in the US - better plan on that.'

    Whatever shape the US downturn takes, Mr Lee said the impact on the Singapore economy will be uneven. Construction, marine engineering, ports and shipyards will be 'all right', according to him.

    'Construction will be okay because we have so many things building in Singapore,' Mr Lee said.

    'Marine engineering will be okay because the shipyards are doing well. Ports will be okay because the port is highly competitive and bringing in a lot of business.'

    But tourism, financial services and perhaps information technology will feel at least some pain.

    All this suggests that Singapore's year-on-year economic growth in the coming quarters will fall below the surprisingly strong 7.2 per cent gain estimated for Q1.

    'Essentially, Singapore has to be prepared for fairly rough weather ahead,' said Manu Bhaskaran of Centennial Group, a US-based economic consultancy.

    He sees a prolonged period of 'meagre' economic growth in the US - and Europe and Japan are not going to take up the slack, because the leading indicators for these two large economies also point to a slowdown, according to him.

    Mr Bhaskaran said Singapore has built up some resiliency in its services sector, which puts it in a better position than before to absorb the impact of a US recession. But even then, it remains an open economy and a downturn in the US, Europe and Japan at the same time will hit Singapore.



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