Prime Minister Lee Hsien Loong said Singapore economy is not in a crisis but there is no immediate fix for the slower growth the country is facing, which has become a new normal. He said the slack in growth demands structured, long term solutions.
"Growth has slowed, yes. In a way, this is a new normal ... It's not a crisis; there are still bright spots in the economy, and what we need to do is we need to work hard in order to grow, in order to upgrade ourselves, the prime minister said.
Weeks ago, Singapore's Trade and Industry Minister Lim Hng Kiang said economy was experiencing turbulence but ruled out the possibility of the country slipping into an outright recession.
Data released on October 14 showed Singapore's gross domestic product contracted 4.1 percent on a quarter-on-quarter basis, compared with 0.2 percent growth in the previous quarter. The economy recorded 0.6 percent growth year-on-year in the third quarter, which was shockingly slower than the 2 percent growth in the second quarter.
A week later, the central bank said trade dependant Singapore economy weakened over the past six months with all sectors seeing a broad-based downshift. The business outlook remained generally negative, especially among SMEs that contribute a hefty share of Singapore's economy.
Prime Minister Lee said an emergency package, similar to the one rolled out after the 2008 financial crisis, will not be of much help to the economy right now. He said what's needed is not a pill to cure an infection but vitamins that need to be administered over a long term. "The prescription is upgrading and restructuring," the prime minister said while speaking to labour union leaders in the NTUC Centre in Marina Boulevard.
Lee said the slowdown in Singapore is related to the global trade downturn and the oil market regression, and that the local economy will bounce back when global demand recovers. Lee expressed hope that Singapore will return to 2 to 3 percent growth in future but cautioned that, as a developed economy, growth rate will largely remain muted.
The continued oil market downturn has left lasting scars on Singapore's economy with many local oil and gas services companies running into losses and shedding jobs. EMAS Offshore reported this week a full-year loss of $265.3 million (S$137.2 million), adding that the net loss for the three months ended 31 August 2016 stood at $98.5 million.
Earnings at marine services companies like Sembcorp Marine and Keppel Corp, as well the shipbuilding and offshore support companies, have been hit by the industry downturn. Earlier, SembCorp Industries said net profit for the third quarter plunged 56 percent following a string of poor performances in most of its business divisions. This came after SembCorp Marine reported a net loss of S$21.8 million in the third quarter, reflecting a hit on business on account of the sustained downturn in the oil and natural gas market.