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SINGAPORE: In an interview with CNBC before leaving for the 14th ASEAN Summit in Thailand on Friday, Singapore's Prime Minister Lee Hsien Loong said ASEAN must continue to push for closer economic integration, despite recent calls from Malaysia and Indonesia to buy local.
Mr Lee said: "In this global environment, if we give the impression that ASEAN is not fully open for business, I think we will be the losers when a new landscape emerges," he said.
The prime minister said that exporting countries can no longer depend on the US to be the "consumer of things made all over the world", and this "global rebalancing" of trade could lead to a shift towards more investment and consumption in Asia. But he said such measures can only go so far.
"We can't just tell households to go and spend more money because they have their needs now, their needs in the future. When they grow old, they need to save, they need to save for their retirement... and these are structural and life-cycle matters which have to be taken into account," Mr Lee said.
Turning to the Singapore economy, he said the unemployment rate could hit 5 per cent this year. He added that depending on the global situation, growth this year could shrink by as much as 8 per cent.
Mr Lee added: "People have asked me – Can it be worse than -5? Yes, it is possible because it depends on the global situation. You just do a quick calculation. Manufacturing is one-quarter of our economy.
"If our exports go down by one-third, that means manufacturing by itself will go down by about one-third because we export nearly everything we make. That means GDP will go down by one-twelfth, which is about 8 per cent... So I think we (should) brace ourselves for a tough year ahead."
But Mr Lee said the government is prepared to do more to stimulate the economy.
- CNA/so
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