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Govt watching economy closely, will step in if necessary

SINGAPORE — It is too early to say if Singapore could see a technical recession, but the Government is keeping a close watch on the numbers and will intervene if needed, labour chief Chan Chun Sing said on Friday (Nov 18), after plunging export figures last month sparked talk of a technical recession.

SINGAPORE — It is too early to say if Singapore could see a technical recession, but the Government is keeping a close watch on the numbers and will intervene if needed, labour chief Chan Chun Sing said on Friday (Nov 18), after plunging export figures last month sparked talk of a technical recession.

The focus for businesses should be on long-term “fundamentals” — such as helping local firms grow internationally — instead of short-term numbers, said Mr Chan, who is also Minister in the Prime Minister’s Office.

On a year-on-year basis, non-oil domestic exports (Nodx) plunged 12 per cent last month, the seventh time exports have contracted this year, further clouding the economic outlook.

The Singapore economy shrank 4.1 per cent in the third quarter from the preceding three months, and a second consecutive quarter of contraction would put the Republic in a technical recession.

Speaking to reporters on the sidelines of the U Future Leaders Summit organised by the National Trade Unions Congress (NTUC), Mr Chan said: “I understand that there a lot of anxieties recently because of developments worldwide and also anxieties with the local conditions.”

But unlike the economic situation back in 2008 and 2009 where there was a general slowdown, the current economic environment shows different industries with “very different” performances.

For instance, industries like oil and gas might be among the hardest hit but others like the e-commerce, education and healthcare sectors are “holding up well”. “If we need to do more, we will do more in the coming months. But we’re watching this very closely,” he said.

Mr Chan said targeted measures such as the Industry Transformation Maps (ITM) — which will be rolled out in 23 sectors — are already in place, allowing companies to tap on technology, or co-locate in state-of-the-art facilities, among other initiatives.

The Committee on the Future Economy (CFE), which will unveil its economic strategies in the first quarter of next year, will also place emphasis on growing businesses, especially small- and medium-sized enterprises (SMEs) and start-ups.

Efforts are also ongoing to introduce courses more quickly to help firms and workers get up to speed with the changing skill sets in a timely way, and avoid a situation where workers are “trained but irrelevant”.

“If you look at it from this perspective, I would say that we are in good shape ... Focus on the fundamentals and not just be overly distracted by the short-term challenges or short-term numbers. Because the long-term fundamentals will determine whether we get out of this situation in a better shape,” said Mr Chan, who is also deputy chairman of the CFE.

DBS senior economist Irvin Seah said that the situation is not as bleak the latest Nodx figures suggest, as the numbers, released monthly, are typically distorted by factors such as currency and export prices.

“A technical recession can happen because specific sectors are not doing well, but it won’t result in a scenario of mass retrenchment and sharp decline in assets as opposed to a full-fledge recession,” he said. “Full year GDP growth can still be positive even with technical recession.”

The danger, he added, lies in a “self-fulfilling prophecy”. “For example, as a result of believing that Singapore is in or heading for recession, consumers cut down on spending, companies cut headcount and stop investing. This will lead to a downward spiral,” he said.

OCBC Bank’s head of treasury research and strategy Selena Ling agreed: “Pessimism feeds on (itself). It’d be a vicious cycle if consumers tighten their belts and companies cut staff.”

Mr Marcus Lim, co-founder and managing director of water technology company Ecosoftt, noted that for his industry, business is thriving. “A number of countries like India need solutions on how to better treat and manage water ... the market is big. We are looking to grow, not to shrink,” he said.

The situation is less rosy for the oil and gas industry, according to the Institution of Engineers president Edwin Khew, who noted that with thousands of engineers and technicians working in the badly hit industry, layoffs are bound to happen. This means this group of engineers will need to cross-train to tap other opportunities, he added.

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