A recession is unlikely to set in, but the possibility that the Singapore economy could see some quarters of negative growth cannot be ruled out, Minister for Trade and Industry (Trade) Lim Hng Kiang told Parliament yesterday.
Mr Seah Kian Peng (Marine Parade GRC), citing the sombre outlook and weak economic indicators for the past several months, had asked if a recession was imminent and what measures the Government was contemplating.
Mr Lim replied: "Our baseline projection is not an outright recession, but we cannot rule out the possibility that the economy will experience some quarters of negative growth on a quarter-on-quarter basis."
He added that the economy is still expected to grow, albeit at the lower end of the Government's 1 per cent to 2 per cent forecast.
Growth has tapered from 4.7 per cent in 2013, to 3.3 per cent in 2014, to 2 per cent last year.
The Trade and Industry Ministry will release advance estimates of third-quarter growth on Friday and the updated growth forecast for this year next month.
Our baseline projection is not an outright recession, but we cannot rule out the possibility that the economy will experience some quarters of negative growth on a quarter-on- quarter basis.
MR LIM HNG KIANG, Minister for Trade and Industry (Trade). He said the global economic outlook is expected to remain weak in the near term owing to sluggish investment demand in advanced economies, slower growth in China, low oil prices and weaker global trade flows.
Mr Lim also told the House the Government is ready to respond if an economic downturn takes hold.
He said: "Depending on the nature and severity of the downturn, the Government is prepared to consider introducing a range of contingency measures, which could include broad-based as well as sector-specific measures."
His remarks come amid concerns over rising unemployment, slower growth and a weak global economic outlook. The second half of the year is expected to see the economy grow at a slower pace than the 2.1 per cent in the first six months.
While Mr Lim did not elaborate on the potential contingency measures, he highlighted existing schemes that adversely affected firms can tap. These include the SME Working Capital Loan scheme - introduced as part of Budget 2016 - that helps small companies with cash-flow concerns and financing needs for growth. The Government has also deferred the marine sector's foreign worker levy increases for a year, amid challenging conditions faced by the sector.
Mr Lim said the global outlook is expected to remain weak in the near term owing to sluggish investment demand in advanced economies, slower growth in China, low oil prices and weaker global trade flows. Britain's vote to leave the European Union has dampened and added uncertainties to the outlook, he added.
Despite the slowdown in growth, Mr Lim highlighted some bright spots in the economy.
He said: "Tourism-related sectors such as accommodation have benefited from the recovery in tourist arrivals. Growth in 'other services industries' and the information and communications sector is also expected to remain resilient."
Mr Lim also emphasised the importance of pressing on with efforts to steer Singapore's economy towards a "more sustainable growth path driven by productivity and innovation". There is also a need to continue to transform the industries and create good jobs for citizens over the longer term, he added.