Thursday, July 16, 2009

No need for additional stimulus, says minister

THE economy is stabilising, and there is no need for Singapore to introduce further stimulus measures currently, Trade and Industry Minister Lim Hng Kiang said yesterday.

Mr Lim noted that none of the major economies are contemplating a second stimulus package 'anytime soon'.

With unemployment in many economies still on the rise and the pace of recovery uncertain, some have called for a second round of stimulus in countries such as the United States.

But Mr Lim said he did not think the US administration 'is anchoring their actions on that yet', and noted that in Europe, there is no appetite for further stimulus.

Asked if Singapore needed a second boost, he said: 'With the situation stabilising as we see it, this is not on the cards at the moment.'

Singapore's economy pulled itself out of recession in the second quarter and is now forecast to shrink at a smaller rate than previously expected, although the Government warned of a subdued outlook for the rest of the year.

Mr Lim was speaking to the media ahead of next week's meeting of trade ministers from the Asia-Pacific Economic Cooperation (Apec) which will be held at the Shangri-La Hotel.

Singapore is hosting this year's Apec forum meetings on the 20th anniversary of the 21-member grouping.

Among the key issues on the trade ministers' agenda will be assessing measures Apec members took to tackle the crisis and aid recovery. Discussing the more effective measures will help countries handle future crises.

But there is a flip side. In the worst part of the downturn, some countries resorted to steps that bordered on protectionism - such as encouraging their people to 'buy local' - which goes against Apec's long-standing mission to free up trade flows.

Mr Lim said that while some of these actions were expected given the crisis' severity, it was important not to let protectionism go on to 'such an extent that it invites a series of tit-for-tat'.
Apec, a non-binding forum, cannot enforce punitive measures on members that act contrary to its agenda of free trade. But Mr Lim said Apec members should 'shine the spotlight on some of these measures' and 'put some peer pressure on each other' not to succumb to domestic calls for protectionism.

Another item on the trade ministers' to-do list is looking at how to restart the stalled Doha round of global trade talks. Last week, leaders of several rich and developing nations targeted a 2010 deadline to conclude the trade deal.

Mr Lim said World Trade Organisation director-general Pascal Lamy will be present at next week's meeting here and will brief trade ministers on how they can move forward following last week's Group of Eight leaders' meeting in Italy.

The meeting will also touch on socioeconomic strategies for the post-crisis world. One issue likely to be discussed is how countries can persuade their populations that freer trade and further liberalisation is not a threat.

Mr Lim said: 'We have to demonstrate that globalisation is beneficial to everybody. And that means growth must be more inclusive.'

This can be done by having greater social resilience, he said.

Source: Straits Times, 16 July 2009

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