Singapore is not likely to experience another recession, but expects sluggish economic recovery, said Trade Minister Lim Hng Kiang.
Mr. Lim said that the consumption-boosting effects of stimulus packages implemented by the government at the peak of the global economic slump are waning and the persistent high unemployment rate in the US will hurt demand for Singapore exports.
However, “A double-dip recession is not likely,” he said in parliament.
“The recovery in 2010 is expected to be uneven. The risk of a return to recession is low in the absence of further financial shocks,” he added.
“Growth momentum in the second half of 2010 may slow down as the effects of global fiscal stimulus measures and inventory restocking wane.”
“In addition, weak household balance sheets and persistently high unemployment, especially in the US, will weigh down on consumer demand in our key export markets.”
According to the US Labor Department, US employers cut a worse-than-expected 85,000 jobs in December while unemployment rates held at 10 percent, crashing hopes for an immediate rebound in the biggest economy of the world.
The trade-reliant economy of Singapore shrank 2.1 percent last year after experiencing severe recession in Q3 2008 brought by the effects of the global economic crisis.
Mr. Lim repeated the figures that Prime Minister Lee Hsien Loong stated on New Year’s Eve that the economy is expected to grow between 3 and 5 percent this year.
“External demand will continue to grow (in 2010) but at a sluggish pace,” said Mr. Lim.