Singapore’s economy is likely to continue recovering from the global recession and is not expected to have another plunge in the near future, revealed Prime Minister Lee Hsien Loong yesterday.
But a dramatic upturn is not expected, as the country’s growth still depends on the conditions of the developed nations, said the Prime Minister.
Speaking during a press conference prior to the Asia-Pacific Economic Cooperation (APEC) Leader’s Week on Sunday, Prime Minister Lee remarked that the economic recovery in developed countries was possible because of stimulus packages introduced by their governments.
Though the world economy is rising, these packages should not be suddenly removed, according to the Prime Minister.
“As governments withdraw these stimuli, you need to have self-sustaining growth to create prosperity so that you are actually spending what you are creating,” he warned.
He also encouraged Asians to spend more while advised the Americans to save more.
"How you balance the risks of withdrawing (the stimuli) too quickly and administering too much adrenaline, that’s something to be discussed by the finance ministers and central banks, and calibrated as we go along,” he declared.
Mr. Kit Wei Zheng, Citi economist for Malaysia and Singapore, said in a statement that "with export recovery likely gathering steam, it does not appear that a gradualist fiscal-exit strategy will have a huge impact on growth next year” for Asia.
He also noted that countries similar to Singapore are beginning to phase out its stimulus packages. For instance, the Jobs Credit scheme, which subsidizes the wages of its citizens, will be withdrawn by June next year.
"This gradual withdrawal of excessive stimulus is justified because it is no longer needed given the swift recovery in Singapore’s case," said Mr. Kit.