SINGAPORE - The United States is probably in a recession and the Singapore economy will be more severely affected if the turmoil in global financial markets worsens, Singapore’s prime minister said on Wednesday.

The Southeast Asian country was ready to respond if the situation in the United States worsens, said Lee Hsien Loong in a statement to mark May Day. ‘Dark storm clouds have gathered… A US recession has probably already started,’ Mr Lee said.’We must watch closely how the situation in the US unfolds, and be ready to respond if things take a turn for the worse. We have the resources and the ability to do so.’ Mr Lee acknowledged that the rising cost of living in the Republic was a major issue but said Singapore could not be completely insulated from rising global inflation.

‘We need not worry about a food shortage, because we have adequate supplies, and can buy what we need from many sources,’ he said. Mr Lee said that the central bank’s policy to allow the Singapore dollar to rise had moderated the impact of imported inflation.

PRIME MINISTER - LEE HSIEN LOONG

Singapore’s central bank earlier this month tightened monetary policy by allowing a rise in the Singapore dollar, its main policy tool .

Inflation in the city-state accelerated to a 26-year high of 6.7 per cent in March. The central bank expects inflation to hit the upper-end of a 4.5-5.5 per cent range this year, although some economists said inflation for the year could average 6 percent.

Mr Lee reiterated the government’s official forecast that the economy would grow at 4-6 per cent this year. Booming construction, tourism and marine engineering will help lessen the impact of a US recession on Singapore, he said.

Mr Lee also said the labour market would remain tight, and that more jobs will be created as the country builds two multi-billion dollar casinos, the first of which is set to open late next year.

Singapore’s unemployment rate rose to a seasonally adjusted 2 per cent in the first quarter amid mounting uncertainties in the global economy, advance government estimates showed on Wednesday, and analysts warned the jobless rate may climb higher in the months ahead. — REUTERS

Syokkahwin.com Editor’s Comment: Singapore’s economy is highly dependent on its U.S. and European countries’ exports. Realising this, they have made a quick move to diversify their economy to be domestically centred and tourism is one of them. You may have heard about Singapore Tourism Board’s Uniquely Singapore campaign trying to get as many tourists as possible to the City-State nation. In the immediate future, SINGAPORE has two new sources of income:

• The opening of casinos in the Sentosa Island will pour money like crazy into the economy and this is really a significantly high margin business. Manufacturing has been the biggest contributor to Singapore’s economy and the country is slowly moving away from dependency on the volatile Banking and Finance sector.
• Role as LNG hub for the region. LNG import terminal and storage facilities will be constructed and this will give Singapore the edge as the leading LNG trader.

Singapore is going to flex its financial muscle for food purchase from various sources so that they can be never be short of food. This is done by raising its purchasing power through strengthening Singapore Dollars against other currencies namely increasing capital inflows through higher interest rates, tourism money coming in, gigantic casino business in Asia, bigger than Macau and Genting. So no more worries about about increasing subsidies just like Malaysia. It’s expected that oil subsidies will increase to RM 45 billion this year due to high oil prices. But why not strengthening the economy just like Singapore through increased FDI and tourism so we have more USD purchasing power with more value for Ringgit as we purchase Oil in USD! For all you know, Government only have to pay only RM30 billion in Oil Subsidies

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