GDP could shrink 10%

The good news: When US economy improves, S'pore will recover swiftly
By Li Xueying, Political Correspondent
MINISTER Mentor Lee Kuan Yew yesterday raised the possibility of Singapore's economy shrinking by as much as 10 per cent this year.

This would happen if the country's exports continue to drop at the same speed as they did earlier this year, he predicted. They fell 35 per cent in January.

Said Mr Lee: 'If the second quarter shows a further drop of another 30, 40 per cent, it (economic growth) will go down to -10 (per cent).'

If so, this would be a performance four times worse than 2001's record low when the economy shrank 2.4 per cent.

Prime Minister Lee Hsien Loong said last week the economy could shrink by 8 per cent, a prognosis bleaker than the official forecast of -2 per cent to -5 per cent, if Singapore's exports were to fall by a third.

Speaking at a dialogue organised by news agency Thomson Reuters, MM Lee fielded over 20 questions from the audience of largely bankers. Most queries centred on the economy.

He leavened the gloom by observing that Singapore will be one of the fastest to recover once the major economies - the United States, Europe, Japan - did.

'There's no running away from it. They must recover before we bounce back,' he said.

'(But) when they do recover, we'll bounce back faster than anybody else because...three-and-a-quarter times our GDP is in external trade. So we just got to tough it out.'

Another reason for confidence is that Singapore is sited within the growth area that is East Asia.

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