By CHUANG PECK MING

The unemployment rate will stay up for some time - even with the economy bouncing back, according to Prime Minister Lee Hsien Loong.

In the near term, the unemployment rate may well rise beyond the 3.3 per cent posted in the second quarter, he said yesterday at the NTUC Ordinary Delegates' Conference.

Mr Lee's comments came a day after the Ministry of Trade and Industry unveiled preliminary figures showing Singapore's gross domestic product jumped 15 per cent quarter-on-quarter in the July-September period.

Compared to the same quarter last year, before Lehman Brothers went bust and sparked a global panic, the GDP crept up 0.8 per cent - the first positive number after three negative quarters.

Mr Lee offered two reasons why the unemployment rate is not coming down yet, despite the upturn - jobless numbers tend to lag behind economic recovery; and the United States is expecting its unemployment to rise above 10 per cent.

'Therefore, we must be psychologically prepared for dampened growth, or in any event for unemployment to stay up,' Mr Lee said.

So far, notwithstanding sharp declines in Singapore's GDP, unemployment has not increased much - only from 2.5 per cent in December 2008 to 3.3 per cent in June this year.

Foreign workers here were hit hardest. Mr Lee noted their numbers fell 21,000 in the first six months of 2009. Local employment actually went up by 7,000 at the same time.

Mr Lee said Singapore is now past the worst of the economic storm, but the global situation is still less than kind.

'So far, growth in the US, Europe, Japan and China has been the result of government spending,' he said. 'When the stimulus ends, their economies may slow down again. If that happens, our growth will be dampened too.'

Mr Lee sees slower growth in the next one to two years but beyond that, he says the prospects for Asia are bright - and Singapore is well-placed to tap into the region's growth.

This article was first published in The Business Times.