ECONOMIC conditions will get tougher going ahead but Singaporeans must not lose track of the longer term issues that affect the country's competitiveness, said Trade and Industry Minister Lim Hng Kiang on Monday evening.

Speaking at the first NUS-MTI economic dialogue, Mr Lim said 'the global economy will eventually recover and we have to be positioned to bounce back'.

RELATED LINKS  SPEECH BY MR LIM HNG KIANG,MINISTER FOR TRADE AND INDUSTRY, AT 1ST NUS-MTI E

He flagged the energy sector as a crucial challenge but assured that the Government would strike a balance between regulating energy production without compromising economic growth.

Mr Lim also admitted that the Government had been 'slightly more optimistic' about the situation in US, Japan and Europe at the beginning of the year, but that 'outlook has now become darker'.

The US sub-prime mortgage crisis has led to a deleveraging process that has resulted in the 'complete restructuring of the US financial sector,' he said. The independent investment banks which had long been a staple of Wall Street have now disappeared. And the US Federal Reserve has to jump in now to inject capital directly into the ailing banks.

With rising unemployment in the US and consumers holding back their spending drastically, the slowdown has spread to Europe and Japan, which have both recorded negative growth in the last quarter, he noted.

Despite signs of inflation easing, he warned that the global competition for resources as well as geopolitical events may cause prices to spike up again.