Bumpy road, but S'pore has shock absorbers

August 9, 2008
Bumpy road, but S'pore has shock absorbers
PM Lee trims growth forecast to 4-5% but says Republic is holding its
own
By CHUANG PECK MING

(SINGAPORE) Brace for a bumpy year ahead, said Prime Minister Lee
Hsien Loong in his National Day Message issued yesterday. Yet, the
latest economic figures he unveiled yesterday were not as bad as some
had feared.

Growth forecast for the full year has been trimmed as expected, but
only by one percentage point at the top-end - from 4-6 per cent to 4-
5 per cent. Less upbeat economists in the private sector had said it
might be revised to the 3-5 per cent range.

For the first half of the year, the economic growth was actually 4.5
per cent, higher than the earlier flash estimate of 4.3 per cent.

'Considering the external challenges, Singapore's economic results
are good,' Mr Lee said.

Still, the revised growth forecast underlines the fact that the
weakening American and global economy has finally hit Singapore. And
Mr Lee predicted that the US difficulties sparked by the housing
crisis would 'probably drag on well into next year before getting
better'.

Mr Lee's message came a day after Finance Minister Tharman
Shanmugaratnam warned that growth is unlikely to rebound 'anytime
soon'.

Sounding more downbeat than the official position so far, Mr Tharman
said: 'I don't think we're near the bottom yet, it's something we're
all watching, especially the American economy. The American economy
is in a much more perilous state now compared to just three or six
months ago. The risk facing the financial system, which is a global
system . . . is still very substantial.'

In his National Day Message yesterday, Mr Lee said that Singapore's
economy has so far not taken the full blow of the US economic
slowdown, thanks to the vibrancy of the Asian region.

'But Asian economies are starting to feel the impact of America's
problems, and so are we,' he said. 'We must therefore prepare
ourselves for a bumpy year ahead.'

Mr Lee said that Singapore was in a strong position, but it must work
together as a group with Asean to keep the region on the radar screen
of investors, who are eyeing more the opportunities in China and
India.

Singapore must also maintain its reputation in a turbulent region 'as
an economy that is competitive, a society that is cohesive and a
government that is honest and competent', according to him.

Mr Lee said that Singapore should look beyond immediate problems to
discover new opportunities and tackle longer-term challenges. He
listed three challenges - develop the economy, reproduce Singapore's
population and keep evolving Singapore's system to stay in touch with
the changing world.

'Unless we create wealth, we will not have the resources to do
anything else,' he said. 'Because we have pushed hard over the last
few years when conditions were favourable, we can now look forward to
many major projects: the Formula One Grand Prix, the integrated
resorts and huge manufacturing investments like the world's largest
solar cell plant. These projects will create many good jobs, and keep
our momentum up despite the uncertainties ahead.'

Mr Lee conceded that some government policies - like the goods and
services tax and electronic road pricing hikes - contributed to the
current inflation, but he defended them as essential.

'Otherwise, we would not do them: the GST allows us to finance
Workfare and other schemes to help lower-income Singaporeans over the
long term, and the ERP keeps our roads free flowing,' he explained.

'I know that Singaporeans wish that prices did not have to rise, or
that these policies were not necessary,' Mr Lee said. 'Unfortunately
this is not possible. But we are doing the next best thing: to put in
place effective relief measures, and provide the poor and needy with
the help they need.'