S'porean PM Goh warns of harder times ahead

S'porean PM Goh warns of harder times ahead

SINGAPORE (Reuters): Singapore faces a year of lower economic
growth and higher unemployment as the U.S. slowdown hits its
electronics industry and the economies of its neighbors in the
region, Prime Minister Goh Chok Tong said.

"We must brace ourselves for a leaner year ahead," Goh warned
in his annual May Day message released on Sunday.

Goh expressed concern about possible job losses especially due
to the global downturn in the electronics industry, which
accounts for 55 percent of Singapore's domestic exports.

"Some workers will be retrenched, particularly those in the
electronics industry. Our unemployment rate is likely to edge
upwards," the Prime Minister said.

The Singapore's economy is expected to grow at a slower 3.5 to
5.5 percent rate this year from a fast 9.9 percent clip last
year, according to official government forecasts.

Goh said Singapore's outlook is also being affected by the
impact of the U.S. economic slowdown on its partners in the
Association of Southeast Asian Nations (ASEAN), particularly
Indonesia and Malaysia.

Several ASEAN countries also face domestic political problems,
Goh said.

"Our neighbors difficulties affect us because we are
interdependent," Goh said.

Singapore's trade with ASEAN countries accounts for 26 percent
of its Gross Domestic Product, while the U.S. accounts for 16
percent, he said.

"The ASEAN economies are under severe stress. Like Singapore,
they are hit by the slowdown in the U.S. economy," Goh said.

The uncertain political and economic outlook in the region
would also affect investor confidence and interest, Goh said.

"Some companies invest in Singapore for the larger ASEAN
market."

"Hence, while we may manage our politics and economy well, the
negative assessment of the region will diminish investor interest
in Singapore," said Goh.

Goh said the government was closely watching developments, and
did not expect a genuine recession to occur.

"But if the slowdown becomes more severe than we expect, the
government would implement measures to help companies and workers
cope, as we have done before" he said.

Goh noted that companies were already facing lower orders and
dwindling profits, and pushing up wages would only compound
employers' problems.

He stressed that it would be prudent for Singapore to moderate
wage increases as companies were cutting back production sharply
and running down inventories.