WELLINGTON, NEW ZEALAND: Prime Minister Lee Hsien Loong says Singapore should brace for slower growth ahead, even as a technical recession may be avoided for now.
Speaking at the end of his official visit to New Zealand on Tuesday, Mr Lee told reporters that the GDP numbers for the second quarter of this year "may look a little better than the first estimates".
"So you might technically avoid a technical recession," he said.
Singapore’s economy shrank 0.7 per cent in the April—June quarter from the first quarter, based on advance estimates from the Ministry of Trade and Industry (MTI). And, economists expect the government to report another decline in GDP for the July—September quarter, pushing the country into a recession.
But Mr Lee indicated that the final Q2 numbers may be revised upwards, and if they turn out to be positive, a technical recession will not happen in the third quarter.
Advance estimates for the third quarter will be released by MTI on Friday.
However Mr Lee added a technical recession later may be unavoidable with the prospect of slower growth.
Mr Lee warned that slow growth also means that Singapore will not have a lot of margin for error. Hence, the need to keep the economy strong.
"When you are going for slower growth, and we are expecting slower growth, then the chances of you dipping below zero from time to time will be much greater," said Mr Lee.
He went on to say: "If you are going to make five, six per cent (growth), when you slow down, you slow down to three per cent, it’s okay. If you’re going to make one, two per cent (growth), (when) you slow down, you slow down to zero or minus one, and I think psychologically that is a big difference.
"I think that’s another reason why we must keep our economy strong, because there’s a very big impact on the mood of the people on the confidence of the population and of investors when they see an economy which is able to continue to make progress steadily."
On calls by some Singaporeans for the country to focus less on material aspirations, Mr Lee said Singapore needs to find the right balance between growth, social considerations and quality of life.
He said there also needs to be dynamism and buzz so that there will be opportunities for Singaporeans.
One key challenge, Mr Lee said, is to raise productivity to ensure a steady rate of growth.
"I think we have to work very hard in upgrading productivity, because that’s the key for the long term," he said.
"In the short term, we can’t just shut off the workers we need because if you did, the companies will not be able to cope and that’s not going to do any good to productivity either.
"So, you have to find the right balance to bring in the numbers that you need, subject to right controls and in a sustainable way, and at the same time put a lot of emphasis on companies upgrading themselves."
Mr Lee added: "I think in Singapore many of the companies are finding it difficult finding the workers that they need. They can see the business opportunities there, they want to take the contracts and the orders, they want to start up the new outlets, they can’t find the workers.
"So, does that mean that productivity will go up automatically? No. But it means that there’s pressure on them to make the most of workers that they have and to train the workers with the help from all the government schemes, so that productivity will go up.
"There is no magic solution! You can’t just turn on the tap and the hot water comes out. You have to work hard at it. There’ll be ups and downs and there’ll be rough spots, and we are going to get used to not so fast growth as before, but we have to work to achieve that, because you can’t just lie back and say, ’I’m working too hard, I have to slow down’.
"We have to maintain the balance but we have to make the effort."
Mr Lee is in New Zealand from 6—9 October for an official visit. Earlier Tuesday, he visited the Republic of Singapore Navy’s (RSN) Formidable—class frigate RSS Stalwart in Wellington.
During the ship visit hosted by Chief of Navy Rear—Admiral Ng Chee Peng, Mr Lee was accompanied by New Zealand’s Minister of Defence Dr Jonathan Coleman and other senior officials from the two countries.
Personnel from the New Zealand Defence Force and Singaporeans living in Wellington were also present.
The delegates were brought on a tour of the ship and briefed on the frigate’s capabilities. Mr Lee and Dr Coleman also interacted with the crew of RSS Stalwart.
RSS Stalwart is making a port call at Queen’s Wharf in Wellington before its participation in Exercise Lion Zeal with the Royal New Zealand Navy (RNZN) in Auckland.
The RSN and RNZN interact regularly through professional exchanges and visits, cross—attendance of professional courses and multilateral exercises under the ambit of the Five Power Defence Arrangements and the Western Pacific Naval Symposium.
Prime Minister Lee has since left New Zealand for Melbourne for the start of his official visit to Australia.
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