This second revision within a month is prompted by unexpected developments, he said, citing the steep fall in Singapore's December trade figures which show the economy of its major trading partners has taken a turn for the worse.

RELATED LINKS  Edited Transcript of comments by Prme Minister Lee Hsien Loong

Mr Lee told reporters that one company had built up six months' worth of goods with no buyers. At the PSA container terminals, cranes are lying idle.

'It's a situation which is already gloomier now than it was on New Year,' he said after a lunch meeting with unionists.

The day after New Year, the Government revised downwards this year's growth forecast to between -2 and 1 per cent, from November's projection of between -1 and 2 per cent.

In the past couple of weeks, growth and trade numbers all over Asia and elsewhere have plunged, Mr Lee said.

Yesterday,Singapore reported that its non-oil exports fell by 21 per cent last month compared to the same month a year earlier.

Most economists interviewed expect Singapore's economy to contract by 3 per cent.

The business and union leaders who met Mr Lee suggested reducing business costs such as property tax, and the rents of space from HDB and JTC Corp.

Others want the Government's $600-million Skills Programme for Upgrading and Resilience, or Spur, to be more flexible and take in more professionals and middle managers.

Unionists also urged Mr Lee to help middle-income workers, who are hit by the turmoil too.

The Prime Minister said the Government would need to balance the various suggestion, adding that the Budget will run into a deficit this year and if necessary, the Government will dig into the reserves.

'The Government's job is not to do everything which is asked for but to look to see which are the items which will be most effective and then how do I raise the money which I need to fund all the things which I need to do, either from the Budget revenues this year or from the reserves which we have accumulated.'

He also said that Singapore can make the necessary adjustments, 'but what happens after that depends on what happens around the world'.

Mr Lee declined to give specifics of the Budget but indicated that it would not follow other countries in spending money to boost demand because of Singapore's open economy.

'People will spend it once and then most of the money will leak overseas and that's the end of the warm feeling.'

The Budget focus will be to help companies stay afloat and save jobs, so that workers can look after their families throughout the downturn, he said.

It will also deal with the longer-term concerns of competitiveness and creating new capabilities, he added.

This is important because employers, particularly multinational companies that have weathered previous crises, see long-term opportunities in Asia, said the Prime Minister.

They also think Singapore is a good springboard for exploiting these opportunities when conditions improve, he added.

Despite the gloomy picture, Mr Lee is heartened that unionists and bosses share similar views on the need to work together to keep jobs and companies viable.

'It's a tremendous strength for us, in a situation like this, which not many other countries would be able to do,'' he said.

For the full story, read Saturday's edition of The Straits Times.

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