<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Singapore can't spend its way out of recession
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>It must wait for the global storm to pass, PM Lee tells BBC </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Jeremy Au Yong
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PHOTO: BBC
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THE Government will help buffer the impact of the downturn on Singaporeans and businesses, but Singapore will not emerge from the crisis until the global economy starts to heal, Prime Minister Lee Hsien Loong has said.
He made the point to the BBC in an interview aired yesterday, during which he described the current downturn as 'the most severe' since World War II.
Singapore, which has an open and export-reliant economy, could not spend its way out of a recession, he indicated on the Asia Business Report programme.
The recent unprecedented dip into the reserves and the $20.5 billion Resilience Package announced in the Budget were meant to absorb some of the shocks from the global economic slump, PM Lee said.
The measures rolled out include a Jobs Credit scheme which subsidises employers' wage bills, and a Special Risk-sharing Initiative to help businesses get credit.
'They'll help us to reduce unemployment, reduce job losses. They'll help companies to remain viable but we must understand that what we can do is to buffer the impact,' he told the interviewer, the BBC's South-east Asia correspondent Jonathan Head.
'You must wait for the storm to pass.'
Singapore has the world's highest trade to gross domestic product (GDP) ratio, with imports and exports amounting to 3.5 times its GDP. That means the economy is particularly sensitive to changes in the global economy.
Exports have been hit badly by the slump. Figures released on Tuesday showed that Singapore's non-oil exports shrank by 23.7 per cent last month.
While this was better than initial estimates, it still was a 10th straight monthly decline.
Yesterday, major investment banks cut growth forecasts for South-east Asian economies, including Singapore.
Goldman Sachs, for example, expects it to shrink by as much as 8 per cent this year, citing Singapore's exposure to declines in global demand.
It is a worst-case scenario shared by PM Lee. He said in an interview last month with CNBC that the economy could shrink by 8 per cent this year if exports were to fall by a third.
That would be a sharper contraction than the current official forecast of a decline of between 2 per cent and 5 per cent.
In the BBC interview yesterday, PM Lee said of the economic crisis: 'We've had ups and downs before, but this one is not only much sharper and deeper, but I think qualitatively different because it's a worldwide problem; it's not just a cyclical recession but a financial crisis of the whole global financial system.'
But he dismissed suggestions that regional countries were wrong to have depended on exports to Western markets.
'We've had no choice,' he said.
'I mean, the whole world is plugged in as one globalised world. The consumption, the markets, are in America. India and China have been growing rapidly and their markets have been growing rapidly. But on a world scale, they are still very small, maybe one-third, one-tenth of the American and European markets put together.'
Asked if Singapore and neighbouring economies failed to focus on developing domestic markets in the Asia Pacific region, he said: 'I think the big domestic markets, if you're looking at it, will be China, India. The way to develop the markets will be to raise their standards of living; then they have the money to consume.'
As for the paper losses suffered by the Government of Singapore Investment Corporation and Temasek Holdings, PM Lee said the value of the portfolios had 'gone down 20 per cent, 25 per cent'.
'Everybody has taken a hit whether you are Harvard, Yale, Stanford or the Norwegians. If you are in the markets, you have to ride the ups and downs,' he said.
[email protected]
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</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>It must wait for the global storm to pass, PM Lee tells BBC </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Jeremy Au Yong
</TD></TR><TR><TD><!-- show image if available --></TD></TR><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
PHOTO: BBC
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
THE Government will help buffer the impact of the downturn on Singaporeans and businesses, but Singapore will not emerge from the crisis until the global economy starts to heal, Prime Minister Lee Hsien Loong has said.
He made the point to the BBC in an interview aired yesterday, during which he described the current downturn as 'the most severe' since World War II.
Singapore, which has an open and export-reliant economy, could not spend its way out of a recession, he indicated on the Asia Business Report programme.
The recent unprecedented dip into the reserves and the $20.5 billion Resilience Package announced in the Budget were meant to absorb some of the shocks from the global economic slump, PM Lee said.
The measures rolled out include a Jobs Credit scheme which subsidises employers' wage bills, and a Special Risk-sharing Initiative to help businesses get credit.
'They'll help us to reduce unemployment, reduce job losses. They'll help companies to remain viable but we must understand that what we can do is to buffer the impact,' he told the interviewer, the BBC's South-east Asia correspondent Jonathan Head.
'You must wait for the storm to pass.'
Singapore has the world's highest trade to gross domestic product (GDP) ratio, with imports and exports amounting to 3.5 times its GDP. That means the economy is particularly sensitive to changes in the global economy.
Exports have been hit badly by the slump. Figures released on Tuesday showed that Singapore's non-oil exports shrank by 23.7 per cent last month.
While this was better than initial estimates, it still was a 10th straight monthly decline.
Yesterday, major investment banks cut growth forecasts for South-east Asian economies, including Singapore.
Goldman Sachs, for example, expects it to shrink by as much as 8 per cent this year, citing Singapore's exposure to declines in global demand.
It is a worst-case scenario shared by PM Lee. He said in an interview last month with CNBC that the economy could shrink by 8 per cent this year if exports were to fall by a third.
That would be a sharper contraction than the current official forecast of a decline of between 2 per cent and 5 per cent.
In the BBC interview yesterday, PM Lee said of the economic crisis: 'We've had ups and downs before, but this one is not only much sharper and deeper, but I think qualitatively different because it's a worldwide problem; it's not just a cyclical recession but a financial crisis of the whole global financial system.'
But he dismissed suggestions that regional countries were wrong to have depended on exports to Western markets.
'We've had no choice,' he said.
'I mean, the whole world is plugged in as one globalised world. The consumption, the markets, are in America. India and China have been growing rapidly and their markets have been growing rapidly. But on a world scale, they are still very small, maybe one-third, one-tenth of the American and European markets put together.'
Asked if Singapore and neighbouring economies failed to focus on developing domestic markets in the Asia Pacific region, he said: 'I think the big domestic markets, if you're looking at it, will be China, India. The way to develop the markets will be to raise their standards of living; then they have the money to consume.'
As for the paper losses suffered by the Government of Singapore Investment Corporation and Temasek Holdings, PM Lee said the value of the portfolios had 'gone down 20 per cent, 25 per cent'.
'Everybody has taken a hit whether you are Harvard, Yale, Stanford or the Norwegians. If you are in the markets, you have to ride the ups and downs,' he said.
[email protected]
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