S'pore economy slows and sees deficit, Goh says<\/p>\n
SINGAPORE (Reuters): Singapore Prime Minister Goh Chok Tong
\nsaid on Saturday that second-quarter growth in Singapore had
\nslowed and the rest of the year would be worse.<\/p>\n
"After a revised growth of 6.1 percent in the first quarter,
\n(the economy) registered only 1.6 percent in the second quarter.
\nIt will slow further in the second half," he said in his national
\nday message.<\/p>\n
Singapore celebrates its 33rd year of independence on August
\n9th. The Prime Minister traditionally addresses the nation on the
\neve of the celebrations.<\/p>\n
Goh said the main cause of Singapore's slow growth was the
\nsharp fall in external demand from its key trading partners in
\nAsia -- Japan, Indonesia and Malaysia.<\/p>\n
"External demand accounts for 70 percent of total demand for
\nour goods and services..," Goh said. "So when our external demand
\nfalls we are severely affected."<\/p>\n
Goh said Singapore's competitive position had also been hurt
\nby the depreciation in the currencies of its neighbours as their
\nexports to the U.S. and Europe had become more competitive.<\/p>\n
"The economic crisis has affected Singapore's competitive
\nposition," Goh said.<\/p>\n
"Our neighbours' weaker currencies have made their wages and
\nother costs much cheaper than ours. This has made their exports
\nto the U.S. and Europe more competitive."<\/p>\n
Goh noted in his speech that South Korea, Thailand, Malaysia
\nand Indonesia have seen their currencies depreciate by 35 to 80
\npercent against the US dollar while the Singapore dollar has
\ndepreciated by less than 20 percent.<\/p>\n
He added that countries in the region which have built new
\nairports, ports and industrial estates will have surplus capacity
\nand will lower prices to stay competitive or "may even resort to
\nadministrative measures or legislation."<\/p>\n
Goh said the Asain slowdown presented Singapore with its "most
\nformidable" challenge since independence.<\/p>\n
He said Singapore is likely to see its second budget deficit
\nnext year as government revenues fall while it continues to spend
\non infrastructure.<\/p>\n
Goh cautioned, however, on Singapore dipping too much into its
\nreserves to kick start the flagging economy.<\/p>\n
"As your trustee responsible for these reserves, I am honour-
\nbound to protect them. We must not fritter them away, whatever
\nthe pressures we face," he added.<\/p>\n
Singapore announced the S$2 billion (US$1.15 billion) stimulus
\npackage in June, a move Finance Minister Richard Hu said would
\nresult in a budget deficit of about S$800 million.<\/p>\n
It was the first time the wealthy city state had a budget
\ndeficit since it faced a recession in the mid-1980s.<\/p>",
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