The Ministry of Trade and Industry (MTI) expects Singapore’s GDP to grow between 1 – 3 per cent this year.
Delivering Singapore’s Budget 2012 in parliament today, deputy prime minister Tharman Shanmugaratnam said the country is already seeing weaker demand in the manufacturing sector, reflecting sluggishness in the developed markets.
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He also said that despite this, prospects remain positive for companies with markets or investments in Asia.
“They are continuing to hire and expand, although with some caution given the unpredictable global conditions. There will also be continued demand from the region for our services – in finance, logistics and tourism.
“Taken as a whole, Asia is providing some lift to our economy at a time of continuing economic weakness in the US, Japan and Europe.”
Stating that Singapore’s economy will slow down this year, Tharman, who is also Finance minister, stressed that Singaporeans should look at this “in perspective”.
“We enjoyed an exceptional rebound in 2010. By the middle of that year, we had recovered the lost output from the 2008-2009 crisis. Growth in 2011 too was healthy, at about 5 percent.
“Against this backdrop, a slowdown to 1 percent to 3 percent growth in 2012 is still consistent with our medium-term growth potential of 3 percent to 5 percent.”
Touching on employment, Tharman said the labour market is “still very tight currently” and that job creation remains positive. He cautioned that some easing in export industries is to be expected.
He added: “The principal focus of this year’s Budget is therefore not on providing a countercyclical boost to the economy, but on addressing Singapore’s longer-term challenges and building a better future for our people. It is a Budget for the future.
“Nevertheless, we are monitoring global developments closely. There are still threats hanging over the world economy – in the Eurozone’s unresolved problems, in the tensions over Iran’s nuclear programme and in a US economy which remains vulnerable to setbacks.
“Should events take a sharp turn for the worse, we will be ready to act decisively, just as we have done in the past.”