THE Prime Minister does not rule out the possibility of Singapore's economy shrinking by as much as 8 per cent this year.
That would be a sharper contraction than the current official forecast of a decline of between 2 per cent and 5 per cent.
Countries across Asia have experienced sharp reductions in trade, with Singapore's trade having fallen by a third last month. Manufacturing accounts for a quarter of Singapore's economic output and almost all that is made here is exported.
If exports fall by a third, manufacturing output will also fall by a third.
That means Singapore's economy will shrink by a twelfth, or 8 per cent, unless that loss is made up by growth in another sector, such as construction, Mr Lee said in response to a question on how much worse the economic outlook could get.
'People have asked me, can it be worse than minus 5? Yes, it is possible because it depends on the global situation,' he said in an interview with CNBC.
He was also asked if the unemployment rate could rise from the current 2.7 per cent to 5 per cent, as projected by some private-sector economists.
That, too, was possible, he said, as retrenchments are on the rise.
The labour movement estimates that there will be 5,000 layoffs in the first three months of this year.
He said the Government is helping workers in two key ways.
It has put in place a Jobs Credit scheme to reduce wage costs, help companies stay viable and keep workers in jobs.
It has also launched a very big push to encourage companies and workers to use this time for training and skills upgrading.
'We have the courses, we have the grants, we have the incentives...we believe that this is a slack time, it's a good opportunity to upgrade their skills and prepare for new jobs or in case they lose their jobs, to be able to get back into employment again,' he said.Source: Straits Times, 28 Feb 2009