S'pore recovering; stimuli everywhere need careful phasing out, he says
(SINGAPORE) The Singapore economy will continue to maintain its recovery from the recession and a second dip is unlikely to occur anytime soon, said Prime Minister Lee Hsien Loong.
'Looking forward, we do not expect another dip in the economy in the immediate future,' he said yesterday during a media conference held at the Istana ahead of the Asia-Pacific Economic Cooperation (Apec) summit meetings that begin this Sunday. Singapore currently holds the rotating chairmanship of the 21-member grouping.
'We expect the economy to continue to stabilise, but we are not seeing a dramatic recovery either because our growth still depends, to a considerable extent, on what happens in the developed countries.'
Today, Singapore has its 'nose above the water' compared to a year ago, said Mr Lee. He said that the preliminary 0.8 per cent year-on-year economic growth recorded in the third quarter of 2009 may be 'nothing to crow about, but it is something to be grateful for'.
The Republic's GDP rose at a seasonally adjusted annualised rate of 14.9 per cent in the third quarter. Last month, the Trade and Industry Ministry raised its full-year forecast for 2009 to a contraction of between 2.5 and 2 per cent, a sharp drop from its previous estimate of a drop of 4 and 6 per cent.
'My sense is that we are out of the trough, out of the spasm that we experienced in the beginning of this year,' said Mr Lee.
In January, things looked bleak for the Republic and many other countries but the situation has improved because governments responded well, and also partly due to the United States exerting 'extraordinary measures' to prop up their banking and financial systems.
'In Asia, there is a certain momentum and drive innate in the economies, particularly the bigger ones like China and India, so we've come back to a stable position,' he pointed out.
Echoing the views coming out of the recent G-20 summit in Pittsburgh in the US, Mr Lee added that economic stimulus packages that many countries have rolled out over the past year had to be managed carefully and should not be withdrawn suddenly as this would create fresh problems. 'How these are exactly phased out or tailed off while balancing the risks of withdrawing too quickly and administering too much adrenaline, this is something that the finance ministers and central banks will have to discuss, and calibrated as we go along,' said Mr Lee.
As governments gradually scale back on these stimuli, there had to be some self-sustaining growth that could create prosperity such that countries are actually spending what they are creating and not spending by borrowing, he added.
Next week's Apec meetings are taking place during a pivotal time in the global economy, said Mr Lee. The 21 leaders - including US President Barack Obama - will discuss longer-term issues as countries emerge from the recession.
'We will discuss how to foster growth in the region ... more balanced, inclusive and sustainable growth in the region, and also how we can further the economic integration of Asia-Pacific,' said Mr Lee.
The leaders and ministers will also discuss how to further Apec's core mission of advancing free trade and open markets in the region.
'The idea is to consolidate a network of free trade agreements which have sprung up and to reduce the administrative complexities and overheads of businesses,' he explained.
And as Mr Obama prepares to make his first official visit here since taking office earlier this year, Mr Lee highlighted the 'indispensable role' that the US must play in Asia-Pacific. 'America has a role to play in many fields - economic, political, strategic, security. That is a key reason why Apec is an important forum.'
Source: Business Times, 4 Nov 2009
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