Prime Minister Lee Hsien Loong made a statement on 26 November, Tuesday, that the Finance Minister and other related agencies are working on a 2020 Singapore Budget that will be strong and suited to what the Singapore economy needs, considering the state of the world, reported The Straits Times.
Speaking to reporters at the end of his five-day visit to South Korea, the Prime Minister said that with major economies like Japan, China and the United States slowing down, it’s not surprising that the Singapore economy has been sluggish as well.
He did warn against seeing pump-priming stimulus as a solution – a process which tries to boost the economy via government spending and by decreasing interest rates and taxes.
Instead, PM Lee believes that Singapore should capitalise on the economy’s slowdown by redoubling efforts at training, upgrading and productivity improvements.
At the presentation of the Budget this year, Finance Minister Heng Swee Keat announced that productivity in the country increased by 3.6% per year in the last three years, higher compared to the 1.6% per annum growth reached in the preceding three years (from 2012 to 2015).
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Since then, Singapore’s economy has decelerated and is predicted to have a growth of between 0.5% and 1% this year. Whether Singapore goes into a recession depends mostly on external factors, said PM Lee.
“The risks seem to have gone up, but right now the indicators are mixed and unemployment is still low. Corporate profits are not as buoyant as before, the leverage is going up, corporate borrowing is going up,” he said.
“If a problem worsens between the US and China, or… the current uncertainties continue, [the two countries] could go into a recession within the next 12 to 18 months. If that happens, we are at greater risk,” PM Lee elaborated.
He explained that markets are in a state of flux as pending the situation between the U.S and China, as well as Brexit.
“When you have a big cloud hanging over you, nobody wants to make commitments. So we have to understand that those clouds also affect our weather, our climate. And we are preparing for that,” he added.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com