SINGAPORE - Singapore has to adopt a targeted and long-term perspective in its economic strategies, even as it tackles short-term headwinds posed by a challenging global environment, said Trade and Industry Minister Chan Chun Sing.
The Government is monitoring developments closely as Singapore's economic growth slows, and stands ready to support Singaporeans - particularly the most vulnerable - should conditions worsen, he said.
But one has to first be clear about the cause of the "illness" to deliver the right medicine, he added, as he set out why the current downturn is unlike past financial crises.
Speaking at a National Day dinner on Sunday (Aug 4), Mr Chan also made the point that one of the most important factors behind Singapore's success is that the country has constructive politics and a coherent government.
"We have always been transparent and honest with our people on our challenges, opportunities," he told grassroots leaders and residents gathered at the Tanjong Pagar Community Club.
He began his 40-minute speech by explaining the factors contributing to the uncertain external environment, and outlined the strategies Singapore is taking to stay ahead in such a climate.
Advance estimates had shown that Singapore's economy grew by 0.1 per cent in the second quarter of this year, the lowest in a decade.
He also flagged growing downside risks arising from the latest round of United States tariffs on China, the ongoing protests in Hong Kong, as well as Japan and South Korea expelling each other from their trade whitelists.
He noted that during the Asian Financial Crisis in 1997 and the Global Financial Crisis between 2007 and 2008, Singapore's economy experienced sharp but short downturns triggered by a sudden loss of confidence in global financial markets.
The current downturn is driven by weaker external demand and a deepening slump in the global electronics cycle, he said, worsened in part by the uncertainty caused by the United States-China trade conflict.
The downturn in electronics has also spilled over to sectors such as precision engineering and wholesale trade, he added.
"We have seen these cycles before, and we should not panic. There are still bright sparks within our economy in the infocomm industries, in the professional industries and so forth," said Mr Chan, who also spoke in Malay and Mandarin.
But the structural changes taking place at the same time are complicating matters, he said, pointing to longer-term shifts in supply chains and productions patterns, a pull-back from globalisation and an erosion of the multilateral trading system, including institutions like the World Trade Organisation.
"All these will take a much longer time for the global economy to settle into a new equilibrium," he said, adding that Singapore cannot expect things to "go back to where they were" even if the US and China resolved their dispute.
"Our strategies to tackle the challenges of today cannot be the same," he said.
Singapore must build on its fundamentals like its stable and pro-business environment to create the conditions for its longer-term success.
He also cited the country's progressive regulatory environment, its connections to markets in Asia and beyond, its skilled workforce and tripartism.
These fundamentals are why Singapore has managed to maintain its competitiveness and attract high-quality investments like that from industrial gases and engineering group Linde, which will invest US$1.4 billion (S$1.9 billion) to expand its existing gasification complex on Jurong Island.
Singapore has to diversify and deepen its access to markets, work with like-minded countries to explore new areas of cooperation, and press on with efforts to renew the domestic economy.
Rounding up, he said constructive politics "is not about dividing ourselves against one another and not to champion our respective personal agenda at the expense of the national agenda".
"For us to create more space for ourselves we will need to come together even more than before," he added.
The hallmark of Singapore's political system is that the Government has always been transparent and honest on the country's challenges and opportunities, he said.
As Singapore undergoes a leadership transition, everyone must share the same sense of challenges, he added.
"All of us must understand the options and trade-offs that we have and all of us must most importantly own the cause of action that we are about to undertake together as one people," he said.
He expressed confidence that Singapore will be able to weather the uncertainties and achieve even more, so long as Singaporeans can continue to work together and build on the country's core strengths.
"So long as we work together, one united people with a cohesive society and a coherent government, we will continue to achieve even greater heights for ourselves and our country," he said.