Singapore's economy is likely to worsen next year after growing just 1.5 percent in 2008, Prime Minister Lee Hsien Loong said Wednesday, urging Singaporeans to "prepare for a difficult year ahead."
"Our economy will probably contract further. More companies will be forced to downsize. So far we have not seen many job losses, but I expect more retrenchments in the next few months. We must be psychologically prepared," Lee said in his New Year's Day message to the nation.More job losses are expected in the next few months as companies are forced to shed employees, Lee said.
"As a small, open economy, Singapore cannot avoid being hit. We earn our living by trading with and servicing the world. So the fall in worldwide demand has hit our exports, our tourism sector, and our broader economy," he said.
"We must therefore prepare for a difficult year ahead, and especially the first half of 2009.
Singapore's key markets such as the United States, Japan and Europe have fallen into recession after a crisis in the US housing market spread to the financial sector and the larger economy.
The city-state, one of Asia's wealthiest economies, went into a recession this year, although full-year growth came in at 1.5 percent, well below the official forecast of 2.5 percent and the 7.5 percent expansion in 2007.
"The outlook is highly uncertain. At each stage of this crisis, events have turned out worse than the experts predicted," Lee said.
While governments have been implementing monetary and fiscal measures and rescuing troubled financial institutions and key corporations, "no one is sure how the financial systems and economies will respond, or which policies will work," he said.
This has led to a loss of business and consumer confidence, he said, warning against expectations of a quick recovery.
"Quite likely the global recession will be followed not by a quick rebound, but by several more years of slow growth," he said.
Next year's national budget, which has been brought forward to January, will focus on helping Singapore firms so that workers can keep their jobs, the premier said.
"We will introduce measures to help them (companies) with their business costs, including rental and wage bills. We are also studying further financing support for companies," he said.
The government will do its best to help workers keep their jobs and retrain those who have been laid off, he said, adding this will be done by helping businesses through the crisis. - AFP
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