TRADE Minister Lim Hng Kiang said on Monday that economic growth may dip below 4 per cent this year, even as global financial markets try to turn the corner.
Mr Lim also addressed how the US financial fallout has hit - and could further affect - Singapore.
'The financial difficulties in the US has led to de-leveraging and credit contractions, therefore slowing global growth,' said the Minister, who was speaking to the media on the sidelines of the Latin Asia Business Forum 2008.
'That means more difficult export markets for Singapore companies and for our economy...later this year and going into next year.'
Mr Lim added that he expects economic growth to be 'closer to 4 per cent, maybe even a bit below 4 per cent, depending on how the financial crisis pans out over the next few weeks and months'.
His forecast comes on the back of the government's revision of its full-year forecast to 4 to 5 per cent last month from 4 to 6 per cent previously.
'We expect the economy to slow down - it's inevitable but we are confident...we are well-placed to ride this cycle,' said Mr Lim.
The Minister said Singapore is 'as well prepared for these difficulties as we can ever be' because of a well-diversified economy.
'We have our domestic economy to hold us up and we are also looking for other growth opportunities in Asia, Latin America and the Middle East.
'So we hope that with our exposures in different markets and diversification of different sectors...we will be able to ride through the difficulties.'
Mr Lim also dismissed the notion that Singapore would slide into a technical recession - defined as two consecutive quarters of negative growth - saying it is 'not so germane'.
'What is important for Singaporeans is whether we can keep the jobs going,' he said, adding that Singapore's 'very steady pipeline' of investments and different projects will keep generating jobs.
Mr Lim also pointed to the possible benefits that could inevitably arise out of the ongoing financial system troubles: 'In every crisis, there will be opportunities but I wouldn't overplay the opportunities.
'Our first priority is to make sure we ride through this; that our ship is steady and that we continue to generate employment, and Singaporeans are not too hard-pressed because of these difficulties.'
Mr Lim said that it was also fortunate for Singapore that China, India and the rest of Southeast Asia are still 'holding up reasonably well'.
'And in Latin America, they are having fairly good growth at more than 5 per cent, so we should hitch on those opportunities there,' added Mr Lim.
'That's our job in government: To provide these opportunities to as many Singaporean companies as possible in Asia, Latin America and the Middle East.'
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