Singaporeans should prepare themselves for the effects of a sluggish world economy in the coming months, according to Deputy Prime Minister Tharman Shanmugaratnam.
However, he said that local economic fundamentals are still intact and that a major world crisis similar to the one in 2008 is unlikely to happen. His statement was made in response to the flash estimates for the country’s economic growth in Q2, published on 15 July.
Gross domestic product (GDP) rose approximately 50 basis point (BPS) over the same period last year— down from the 9.3 percent year-on-year growth seen in Q1 2011.
The slowdown was rooted in falling pharmaceutical production and lower demand for semiconductor chips in the manufacturing sector. The sector as a whole was also affected by the recent natural disasters in Japan.
“Things are not looking better in Europe,” Mr Shanmugaratnam said, referring to the fact that several European Union members are on the verge of debt default. “They are looking worse now than they were six months ago, and much worse than 12 months ago. They are still kicking the can down the road and unless the problems are being resolved decisively, confidence is going to keep ebbing.”
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