S’pore still internationally competitive, says Lim Hng Kiang

SINGAPORE: Minister for Trade and Industry Lim Hng Kiang said in Parliament on Monday that Singapore remains internationally competitive despite the sluggish economic performance.

Citing the 2012 World Economic Forum’s Global Competitiveness Index, he said Singapore maintained its ranking at the second position.

Recent economic estimates showed the Singapore economy had contracted by 1.5 per cent in the third quarter, on a quarter—on—quarter seasonally adjusted annualised basis.

However, the minister said Singapore has not entered into a technical recession.

He said while the country has avoided two consecutive quarters of decline, economic growth for the first three quarters of 2012 was lacklustre, at 1.7 per cent on a year—on—year basis.

Mr Lim said the muted economic growth was largely due to the challenging global economic conditions, which slowed Singapore’s exports growth and caused its current account surplus to decline from S$35 billion in the first half of 2011 to S$27 billion in the first half of this year.

Over the medium term, Mr Lim said the strengthening of the Singapore dollar is a key macro—economic policy tool to keep inflation in check.

However, the exchange rate cannot be used as a tool to manage Singapore’s export competitiveness.

Mr Lim said competitiveness can only be achieved over the long—term, through higher productivity and through innovation such as creating new products that the market demands.

"The trend appreciation of the Singapore dollar exchange rate is in line with our economic fundamentals. It keeps inflation low and stable, which helps to preserve the purchasing power of Singaporeans’ income and savings," said Mr Lim.

"Given that Singapore’s labour market remains healthy, with strong employment creation and a low unemployment rate, there is no immediate need for the government to step in with measures to cushion the economy from the slowdown in external demand," he added.

— CNA/cc