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S’pore economy in for a rough ride: Tharman

SINGAPORE — The Republic is in for a rough and bumpy ride that will see the economy weaken further in the second half and unemployment rise, but the Government has in place short- and long-term plans to tackle these challenges, Deputy Prime Minister Tharman Shanmugaratnam said on Wednesday (Sept 28).

Deputy Prime Minister Tharman Shanmugaratnam speaks at the Wong Fong Industries building launch. Photo: Jason Quah

Deputy Prime Minister Tharman Shanmugaratnam speaks at the Wong Fong Industries building launch. Photo: Jason Quah

SINGAPORE — The Republic is in for a rough and bumpy ride that will see the economy weaken further in the second half and unemployment rise, but the Government has in place short- and long-term plans to tackle these challenges, Deputy Prime Minister Tharman Shanmugaratnam said on Wednesday (Sept 28).

Speaking to reporters at the launch of the new headquarters for Wong Fong Industries, Mr Tharman said that Singapore’s gross domestic product (GDP) is likely to come in at the lower end of the official 1-2 per cent forecast this year.

“We are in for a tough period and it will last for a while. This year, we had some growth in the first half of the year. I think the second half of the year will be weaker, so we will probably end up somewhere at the lower end of the 1 to 2 per cent range,” Mr Tharman said.

The Government last month lowered Singapore’s growth forecast for this year to between 1 and 2 per cent, from 1 to 3 per cent previously, as uncertainties arising from the United Kingdom’s exit from the European Union, the weaker global growth outlook and a lacklustre domestic performance combine to weigh on the economy. GDP grew by 2.1 per cent in the first half of the year.

Mr Tharman pointed to several factors for the slowing growth. He said that, structurally, Singapore is in a “new mode of growth”, and cannot keep growing by increasing manpower, and had to increase productivity.

“Even if things go well in Singapore, structurally we are talking about normal growth being 2 to 3 per cent — which is relatively good if we go by the standards of most developed economies. That’s the normal growth that we should expect,” Mr Tharman said.

But Singapore is currently experiencing below-normal growth because of “cyclical winds”, he added.

“It’s partly because of the general slowdown of the global economy, partly because of the restructuring in China. But there are also some sector-specific factors — in offshore and marine, which is going through really tough times; in shipping and transport services, partly because the commodities boom is over; and in some other areas like electronics, which has also been going through a down cycle,” he said.

There are plans in place to help Singapore recover.

Over the medium-to-long term, the Committee on the Future Economy will serve that purpose. “There’s opportunity around us, opportunities in the region; and we’ve got to build our capabilities, build up our competitiveness, so that we can make the most of these opportunities,” Mr Tharman said. In the short term, the Republic aims to tackle problems that workers and small and medium enterprises (SME) face.

The Ministry of Manpower’s labour market report for the second quarter showed that more than 9,500 people were laid off from their jobs in the first six months of this year — the highest since 2009. It also showed that for the first time since June 2012, there were more people looking for work than the number of vacancies available. Seasonally adjusted, there were 93 job openings for every 100 job seekers at the end of the second quarter of the year.

The unemployment rate for Singaporeans increased from 2.6 per cent to 3.1 per cent over the same period, while that for citizens and permanent residents went up from 2.7 per cent to 3 per cent.

Unemployment has gone up now and will “very likely go up further”, Mr Tharman said, and Singapore will do its utmost to make sure that the rise in unemployment does not become structural.

“There are cyclical factors that are leading to the rise in unemployment, but we’ve got to make sure that it doesn’t become structural. And that means we’ve got to help everyone who’s displaced from a job to get back in as soon as possible,” Mr Tharman said. “The big task is to match people to jobs and to reduce the mismatches in skills between what people have and what jobs require,” Mr Tharman said.

For SMEs, he added, this is a time to retool, to build up capabilities.

Mr Tharman cited Wong Fong Industries as an example of a company that has invested in new capabilities. “We want to help as many SMEs as possible to retool during this period … There is no lack of schemes and funding, but the SMEs have to come forward and take advantage of these schemes.”

Separately, addressing a query on the latest report by the global Financial Action Task Force, which said that Singapore needs to do more over cross-border money-laundering cases, the minister said that “there are some areas for improvement and we (Singapore) are completely focused on it”.

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