SINGAPORE: The possibility of Singapore’s economy experiencing “some quarters of negative growth” can not be ruled out even though the Government does not expect an outright recession, said Trade and Industry (Trade) Minister Lim Hng Kiang in Parliament on Monday (Oct 10).
“Our base line 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,” said Mr Lim in response to a parliamentary question from Member of Parliament Seah Kian Peng on whether a recession is imminent given the deterioration in recent economic data.
According to the minister, the MTI expects Singapore’s gross domestic product (GDP) for the second half to come in lower than the 2.1 per cent seen in the first six months of the year. For the full year, the MTI is still expecting the economy to grow between 1 to 2 percent, “albeit on the lower end of the projection curve", Mr Lim added.
Given the ongoing developments in the global economy, the Government will continue to monitor the situation closely and stands ready to respond in the event of a downturn, Mr Lim said.
“Depending on the nature and severity of the downturn, the government is prepared to consider introducing a range of contingency measures, which could include broad-based as well as sector-specific measures,” he said, while adding that companies impacted by the slowdown can tap on assistance measures that are in place such as the SME Working Capital Loan scheme.
The Government has also deferred the foreign worker levy increases for the marine sector for a year, he noted.
Mr Lim said that Singapore’s status as a “small open economy” means that the Republic’s economic prospects are swayed by external developments, such as slowing global growth since the 2008 Global Financial Crisis.
In the near term, the global economic outlook is likely to remain weak with investment demand in key advanced economics being sluggish, moderating growth in China, low oil prices and weaker global trade flows. The UK’s vote to leave the European Union in June has also “dampened and added uncertainties” to global growth, he said.
In light of the global headwinds, externally-oriented services sectors such as finance and insurance as well as wholesale trade have slowed and could continue to face external headwinds. Meanwhile, manufacturing output still shows signs of weakening on the back of sluggish external demand, despite a pick-up in the second quarter. Companies in the marine and offshore engineering segments, and precision engineering clusters will remain sluggish on the back of low oil prices, while domestic-oriented sectors such as food services and real estate are likely to remain weak, Mr Lim said.
However, there are still bright spots in the economy such as tourism-related sectors that have benefited from the recovery in visitor arrivals, according to the Minister. Other services industries, and the information and communication sector are also expected to remain resilient, given the growth in the education, health and social services, as well as IT and information services segments, he added.
Despite the global headwinds, Mr Lim emphasised that it remains important to "press on with efforts to steer (Singapore's) economy to a more sustainable growth path driven by productivity and innovation".
He added that the transformation of industries and creation of good jobs for Singaporeans over the longer term will also need to be continued.
EDB INVESTMENT COMMITMENTS TO ADD MORE THAN 20,000 JOBS IN 2016: ISWARAN
Mr S Iswaran, Minister for Trade and Industry (Industry), also answered several questions in Parliament on Monday. For one, Member of Parliament Saktiandi Supaat asked how the Government is addressing the fall in private investments, and whether the decline in private investments and economic restructuring could affect job creation in the medium term.
According to Mr Iswaran, the commitments that the Economic Development Board (EDB) has secured for fixed asset investments (FAI) moderated to S$11.5 billion in 2015, from S$12.1 billion in 2013. Apart from uncertain global economic conditions, the decline reflected Singapore’s “targeted approach towards attracting projects that are consistent with our stage of economic development, manpower policies and international commitments on carbon emissions”, he said.
However, re-investments from the existing base of companies have focused on increasing productivity through the adoption of automation technologies and upskilling of the workforce, Mr Iswaran said.
In addition, the EDB continues to harness investor interest from regional markets to establish headquarters in Singapore. While these initiatives do not always entail large FAIs, “they create good jobs for Singaporeans”.
Nominated Member of Parliament associate professor Randolph Tan asked whether an undersupply of suitable manpower was a factor affecting investment commitments. To that, Mr Iswaran answered: “EDB works closely with companies to meet their projected job commitments. This includes partnering academic institutions and industry to ensure that Singaporeans are equipped with the appropriate skillsets to take up the diverse range of jobs on offer.”
For 2016, EDB expects investment commitments to create 20,000 to 22,000 jobs, marking an increase in job commitments compared to 16,800 in 2015 and 18,600 in 2014, the Minister said.
At the same time, the Government's industry transformation efforts will also support sustainable job creation in the medium term. "Many of these jobs, and others in sectors like education and healthcare, are suitable not just for new entrants to the job market but also for mature workers seeking a new career", according to Mr Iswaran.
“The Singapore economy will continue to generate good job opportunities for Singaporeans who are willing to upgrade their skills and work in growth sectors,” he said.
“It is 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. On its part, the Government is firmly committed to supporting our workers and companies through this transformation.”