PM Lee doesn’t expect another dip in Singapore’s economy

Prime Minister Lee Hsien Loong said on Tuesday he does not expect another dip in Singapore’s economy.

Mr Lee was giving his assessment on the global economic outlook ahead of the Asia Pacific Economic Cooperation (APEC) meetings, which will take place in Singapore.

The prime minister noted that most countries are out of the “trough of spasm” that was experienced at the start of the year, and said Singapore is at a stable position.

That’s because of quick government response to the financial meltdown, and measures by the US to strengthen its banking and financial systems. In Asia, Mr Lee noted, China and India have helped to drive growth.

Earlier this year, some economists believed that Singapore might experience a W-shaped recovery — meaning a second dip after this initial bout of recovery.

It is the first time Mr Lee has said that he believes a second recession in Singapore is unlikely for now.

He said the preliminary 0.8 percent year-on-year economic growth in the third quarter this year was “nothing to be proud of, but something to be grateful for”. The government’s GDP forecast for the year is now at minus 2.5 to 2 percent.

But he said the outlook remains uncertain as governments start to withdraw their stimulus packages, adding that he does not expect a dramatic recovery.

Mr Lee said: “You have to deal with the imbalances. Americans have to save more. Asians have to spend more, either investment or consumption and financial system problems have to be sorted out.

“All the toxic assets that pre-occupy us not many months ago, which have disappeared from the headlines now, I think they will gradually come to fruition and you must decide how will they be recognised? On whose accounts will they be on? And which institutions will have to take the hit and what happens then?

“Therefore, I don’t see a rapid, dramatic expansion back. At best, a steady gradual recovery, giving us time to sort these problems out.”

It is against this backdrop that leaders from the 21 Asia Pacific economies will meet from Sunday. Mr Lee said their talks will therefore focus on longer term issues that will “foster growth in the region”.

Even as economies like the US proclaim “buy-local” policies to protect domestic markets, APEC leaders are expected to push for what they call, “inclusive growth”.

Mr Lee said: “Because of the integration of the APEC economies…..we have generated prosperity. And if you want that to sustain, you can only do that if there is a political consensus. And to have a political consensus, the benefits of growth have to be enjoyed not just by a minority of lucky ones or rich ones but a broad majority of population including a broad middle group of ordinary people.”

APEC’s 2009 theme is “Sustaining Growth, Connecting the Region”. Hence, other issues leaders will discuss include “sustainable growth”, that is issues related to climate change and energy efficiency as well as “balance growth”, that is dealing with reforms to reduce the imbalance in savings and investments.

Leaders are also expected to push for further regional economic integration by advancing free trade within the Asia Pacific. And since this will be US President Barack Obama’s maiden APEC meeting, all eyes will be on the message the US commander in chief will deliver when he meets his Asian counterparts.

For the first time, there will be a US-ASEAN meeting on the sidelines of APEC.

Prime Minister Lee said: “Our message to him (Mr Obama) is the US has many friends and many interests in the region. We welcome them as a partner and we hope that we will be able to strengthen the relationship with the US and they will play a major role in the Asia Pacific.

“And I hope his (Mr Obama) message to the region is he will want the US to play this role and they will be engaged not just on trade but also on economic cooperation as well as security, cultural issues. It will be a broad engagement.

“We know he (Mr Obama) has many preoccupations. He has domestic preoccupations (like) healthcare. Internationally, he has many worries – in Iran, in Israel, Palestine, Afghanistan. He has a big decision to make and even within the Asia Pacific, he has got North Korea to worry about. But beyond all these worries, there are long-term interests which we pay tending and attention.”

Mr Lee noted that the APEC meeting is also an opportunity to showcase Singapore. A Singapore Evening, to be held at the Esplanade, is being planned for delegates to soak in the sights, sounds and taste of Singapore.

He said: “We have many guests in town, and as they say in Chinese, ‘you peng zi yuan fang er lai’. We should be very pleased we’ve got many friends from far away and let’s show them what Singapore can be.

“Let’s be a hospitable host, whether you’re a taxi driver, whether you’re a staff in the hotel, whether you’re a stranger who is asked for directions in the street, whether you’re just going about your business and inconvenienced because the APEC convoy has zoomed by and left you standing in a traffic jam, please do your part and show them what Singapore can do.”

Unlike previous international events held in Singapore, the APEC meetings will be held in at least two venues, most of them at the Suntec Convention Centre in downtown Singapore. The leaders’ meeting will be held at the Istana.

Source : Channel NewsAsia – 3 Nov 2009

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