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WHILE the Singapore economy could go through several quarters of negative growth, the government does not expect an outright recession to take place, Trade minister Lim Hng Kiang said on Monday.
He told Parliament: "Our baseline projection is not an outright recession, but we cannot rule out the possibility that the economy will experience some quarters of negative growth on a quarter-on-quarter basis."
He was responding to the concern expressed by Member of Parliament (Marine Parade GRC) Seah Kian Peng over the weak economic indicators of late, exemplified by rising unemployment, slower growth projections and a weak global economic outlook; Mr Seah asked whether the government though a recession was imminent.
Mr Lim stressed that the government stood ready to respond to a downturn, at a time when the global economic situation continues to remain fluid.
Depending on the nature and severity of the downturn, he said, the government was prepared to consider introducing a range of contingency measures, which could be broad-based or sector-specific.
On balance, he said, growth for the second half of this year was expected to come in lower than the 2.1 per cent achieved in the first six months of the year.
For the full year, the forecast remains at between 1 and 2 per cent, although the minister reiterated that the final figure could fall in the lower end of that range.
MTI will release the advance estimates of third-quarter GDP growth on Friday, and the updated growth forecast for 2016 next month.
Mr Lim said: "As a small, open economy, Singapore's growth prospects are affected by developments in our external environment."
He noted that global growth has been weaker than expected since the global financial crisis, and that the International Monetary Fund has downgraded its global growth forecast almost every year.
He stated that the global economic outlook in the near term was expected to "remain weak". Investment demand in key advanced economies remains sluggish while China's growth continues to moderate as it restructures its economy.
Low oil prices have also affected the growth prospects of oil exporters, including those in the region, he said.
"At the same time, global trade flows have been weak, in part due to sluggish global growth as well as in-sourcing trends in economies like China. More recently, the UK's vote in June to leave the European Union has dampened and added uncertainty to the global growth outlook," he said.
There are external headwinds affecting, for example, the wholesale trade and marine & offshore engineering industries, and weakness in the food services and real-estate sectors, among others.
On the flip side, Mr Lim noted that demand has stayed resilient in industries such as information and communications technology (ICT), education, and health & social services.
In a separate speech, Industry Minister S Iswaran emphasised that the Singapore economy will continue to generate good job opportunities for those who are willing to upgrade their skills and work in growth sectors.
This year, the Economic Development Board expects investment commitments to create between 20,000 and 22,000 jobs, an increase from 16,800 (in 2015) and 18,600 (in 2014).
"Our industry transformation efforts will also support sustainable job creation in the medium term in both new and existing industries," he said, adding that successful economic transformation will require the collective effort of workers, unions, companies, industry associations and the government.
"It's critical that our companies stand ready to embrace new technologies and business models, and that our workers stay open to learning new skills and capabilities, in order to take on new or redesigned jobs."
Mr Lim, meanwhile, gave the assurance that the government will press on with efforts to steer the economy towards a path of more sustainable growth, one that is driven by productivity and innovation.
"We must continue to transform our industries and create good jobs for Singaporeans over the longer term," he said.
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