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'We should still be able to achieve 4 to 6 per cent growth this year, as MTI has projected, but the economy will slow down in the next few quarters, and the slowdown could last into next year,' said PM Lee (above). -- ST PHOTO: CHEW SENG KIM
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PRIME Minister Lee Hsien Loong highlighted two immediate challenges - economic uncertainties arising from the US slowdown and rising cost of living in his May Day Rally address on Thursday morning.
While he remains upbeat about Singapore's economic prospects and is confident that it is on track to achieve 4 to 6 per cent growth this year, he urged the people to 'stay on guard and be prepared' for the challenging times ahead as the country is likely to sail into choppier waters amid the global downturn.
With the United States bordering on recession, PM Lee said this will impact on Singapore if the US economy takes longer to sort out than expected.
The economy may slow down in the next few quarters and this could last into year, warned Mr Lee.
'Employers and workers have to bear this in mind in negotiating collective agreements,' he said in his address to some 1,500 trade union members at Downtown East to mark Labour Day.
Companies must ensure that any built-in increases are sustainable, and those which do well should reward workers with higher variable bonuses, he said.
On the US economic turbulence sparked off by the sub-prime mortgage loan crisis which has spread throughout the US banking system and to other countries, Mr Lee said the general view is that the immediate crisis has passed after the US government and Federal Reserve took bold actions to prevent a financial disaster.
'The situation has stabilised, and gradually confidence is returning,' noted Mr Lee, adding that Singapore is 'alright so far' but much will depend on the shape of the US downturn.
'We should still be able to achieve 4 to 6 per cent growth this year, as MTI has projected,' he said. 'But the economy will slow down in the next few quarters, and the slowdown could last into next year.'
Activities like construction and marine engineering will continue to do well, but other sectors will be more affected by problems in the US economy.
'This is a major uncertainty facing our economy,' said Mr Lee, urging employers and workers to bear this in mind in negotiating collective agreements, and ensuring that built-in wage increases are sustainable.
Rising food prices
The Prime Minister, who spoke first in Malay and Mandarin, also highlighted rising cost of living - brought about by rising energy and food prices - as another major concern of Singaporeans.
Essentials like rice have become more expensive. Mr Lee said this is a worldwide problem.
Angry protests and riots over high food costs have rattled several countries in recent weeks as bad weather, competition with biofuels, market speculation and rising demand in Asia send the price of many staples skyrocketing.
Reassuring the people of the food situation here, PM Lee said: 'We are doing alright in Singapore. We have ample supplies of rice ? our importers have been building up their stockpiles, including FairPrice.'
Direct assistance to needy
To help Singaporeans cope with the higher food prices, NTUC is giving out $4 million of FairPrice discount vouchers - 'U-Stretch', while the Government is also distributing substantial benefits.
Some 2.4 million Singaporeans received the first tranche of their Growth Dividends on Wednesday, with low-income families to get more later this year. These households stand to get about $5,000 in total payouts this year.
Mr Lee said the help given is far larger than the increase in cost of living this year due to higher food prices.
He added that direct assistance to Singaporeans, especially the low income and needy, and not price controls, is the right way.
In his hour-long address, PM Lee also dwelt at length on the concerns and welfare of low-wage workers and what the Government and NTUC are doing to help them cope with rising living costs and skills upgrading.
Read Helping low-wage workers top Govt priorty: PM, S'poreans may lose jobs without foreign workers: PM
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