Asean leaders’ summit

Singaporeans warned of some fallout from trade war

PM Lee Hsien Loong speaking to members of the media at the conclusion of the 34th Asean Summit in Bangkok.
PM Lee Hsien Loong speaking to members of the media at the conclusion of the 34th Asean Summit in Bangkok.PHOTO: LIANHE ZAOBAO

BANGKOK • Singapore must expect some fallout from the US-China trade war, said Prime Minister Lee Hsien Loong, as he warned Singaporeans to brace themselves.

Already, exports have been affected, factory orders are down, and "the mood is significantly dampened".

"You can already see our economy slowing this year," he said. This year's growth forecast is between 1.5 per cent and 2.5 per cent, lower than last year's 3.1 per cent.

While the tit-for-tat spat between the United States and China plays out, Singapore will have to focus on factors within its control, such as restructuring its economy and retraining its workers.

PM Lee said: "You cannot just step on the gas and speed up, and make up for a less favourable external environment.

"What we can do is keep on focusing on upgrading and training, and restructuring of the economy, so that we have the productive capability and potential to pick up again when external conditions improve, and to make the best of the conditions as they are now."

The trade war is also proving to be an impetus for Asean to press on with regional economic integration, PM Lee said in remarks to the Singapore media on the sidelines of the Asean Summit in Bangkok.

 
 
 
 
 

Of his fellow Asean leaders, he said: "They are worried about the fallout. They want to continue with economic integration. They want to pursue multilateral avenues."

This includes the Regional Comprehensive Economic Partnership (RCEP) "because it is one of the avenues of cooperation which can help us in a situation when the global economy is in troubled waters".

The proposed trade pact includes Asean plus India, China, Japan, South Korea, Australia and New Zealand, which collectively are responsible for a third of the world's economic output.

RCEP negotiations have been ongoing since 2013 but are patchy due to differences among some of Asean's trading partners. Last Friday, Asean's economic ministers, including Singapore's Minister for Trade and Industry Chan Chun Sing, agreed on the importance of concluding negotiations by the end of this year.

PM Lee noted that "it is not really a deep secret that some of the most complicated issues to resolve are when big economies have to work out with one another what the deal is", adding that some have domestic political timings to consider.

He said the degree of consensus among the Asean countries is quite high, but they will have to get partner countries to be on the same page "because it is a package, and we will try our best".

The trade war between the two major powers is also exerting its own pull on Asean, he observed, when asked if the regional bloc is becoming more divided than ever.

"The divide is a serious issue. We are pulled in different directions, so to hold Asean together as one on this issue will not be easy ."

But he noted that all Asean countries have ties with both countries: "All of us are going to be negatively impacted if those ties turn sour and there is a high degree of recognition of that, and a great desire that third countries not become collateral damage if there is friction or worse between the big powers."

For this reason, he said he believes Asean members are not taking sides. "They just want this to be resolved in a way which will enable global economic cooperation to take place and regional economic integration to take place," he added.

A version of this article appeared in the print edition of The Straits Times on June 24, 2019, with the headline 'Singaporeans warned of some fallout from trade war'. Print Edition | Subscribe