No Signs Of A Recession, Says Tharman

Source : The Straits Times, June 9, 2008

But the hike in fuel prices in Malaysia will cause discomfort here

SINGAPORE is not heading for a recession, said Finance Minister Tharman Shanmugaratnam, although fuel price increases in Malaysia would lead to discomfort.

'From all indications we have at this point, I don't think we're heading for a recession.

'But there will be discomfort on the ground,' he said, speaking to Channel NewsAsia at the Entrepreneur-in-You Carnival at Republic Polytechnic.

At the event, about 7,000 people turned up to pick up tips on starting their own business.

'Unfortunately, the fuel price increase in Malaysia does mean that vegetable, poultry and some other prices will go up. We can't avoid that,' he said.

Malaysia's decision to trim subsidies for petrol and diesel and raise pump prices has meant that overnight, there has been a 41 per cent increase in petrol prices, from 80 Singapore cents to $1.13 per litre, while diesel prices rose 63 per cent, from 66 cents to $1.08 per litre.

Prices of a range of goods are set to go up as the cost of trucking them in rises, and fresh food tops the list.

But practically everything imported from Malaysia, including building materials, will also cost more soon.

He added that it was fortunate that rice prices globally were going down.

'But overall, we're in a situation which isn't temporary - this will be with us for a while.

'Commodity prices are much higher than what they used to be,' he said.

This was being tackled through government measures such as Growth Dividends, goods and services tax (GST) credits, as well community initiatives on the ground, he said.