Published January 17, 2009

Growth pains

GDP forecasts may be revised again in light of bad news: PM Lee

By CHUANG PECK MING

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THINGS are worsening fast on the economic front. Barely two weeks after the government trimmed its economic growth forecast for 2009, it is looking to revise its estimate, Prime Minister Lee Hsien Loong told reporters yesterday.

And it is likely that there will be a further cut in the government's current growth projection of minus 2 per cent to plus one per cent for this year.

'It's a situation which is already now gloomier than it was on New Year,' Mr Lee said after meeting with business leaders at the Istana to get a 'direct feel' of business on the ground.

It was in his customary New Year speech on Jan 1 that Mr Lee, painting a gloomy economic outlook, said that the government had reduced its 2009 growth forecast made in November, from the minus one per cent to plus 2 per cent range to minus 2 per cent to plus one per cent.

But since then, he said yesterday, there have been more bad news from other countries.

'Their growth numbers have come down all over Asia,' Mr Lee said. 'The trade numbers have come down very drastically all over Asia. The Koreans have come down by 40-something per cent. The Americans are down, all our major trading partners are seeing this tremendous downturn.'

Indicating that the government has to again revise its 2009 growth estimate, he said that the Ministry of Trade and Industry is already working on it and 'we have a new growth estimate before the Budget on Thursday (next week)'.

He said that this year's Budget - which has been brought forward by a month - would be unveiled at 'a critical moment', when the global economic problems are 'very severe' - and Singapore has been hit 'sharply'.

'We just had some more data today - the trade figures have been very bad because our non-oil domestic exports were down 20 per cent in December. So it's no ordinary Budget,' Mr Lee said.

Apart from sussing out business prospects from the horses' mouths, he also sounded out business leaders about the measures that the government has rolled out to help cut costs and save jobs - such as the $600 million Skills Programme for Upgrading and Resilience (SPUR) - and what more needs to be done and what shape the Budget should take.

Mr Lee has also met union leaders over the past few days for the same purpose.

Apart from wanting to see SPUR 'enhanced further in terms of coverage and flexibility', he said that businesses were generally concerned about overall business costs, including those seen to be created by the government.

Mr Lee was glad that some of the business leaders - especially those from multinational corporations - are also looking beyond the current downturn.

'They see in the long term there are opportunities in Asia and they think Singapore is a good place for them to be able to take this opportunity,' he said. 'So they want Singapore to be part of their story, so they would like us to work with them to position themselves to be able to quietly build up during this period so they would be able to do that when conditions improved.'

Mr Lee said that the Budget would have 'many measures to deal with the immediate issues, but we would have measures to address the longer term, which would deal with growth, competitiveness, new capabilities, creating new opportunities'.

Still, he cautioned that the downturn this time is a worldwide problem. 'It would be a lot harder to get out . . . we can't do much to make a difference.'