SINGAPORE - SINGAPORE is experiencing "unusually weak growth" and the economy is likely to expand at the lower end of the government's official 1-2 per cent forecast, said Deputy Prime Minister Tharman Shanmugaratnam on Wednesday.
"I think we're in for a tough period, and it will last for a while. This year we had some growth in the first half, (and) the second half will be weaker," he told reporters on the sidelines of an event to open transport engineering firm Wong Fong Industries' refurbished headquarters in Joo Koon Circle.
In August, the Ministry of Trade and Industry narrowed the growth forecast for Singapore's economy to between 1 and 2 per cent, down from the earlier wider range of between 1 and 3 per cent.
The latest Monetary Authority of Singapore survey of professional forecasters has predicted economic growth to come in at 1.8 per cent for both this year and next.
When asked if this was too pessimistic, Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, noted that the slower growth reflects several factors.
"We can't keep growing by increasing manpower, we have to get productivity up. Even if things go well in Singapore, structurally we're talking about normal growth being 2 to 3 per cent, which is relatively good if you go by the standards of most developed economies," he said.
Singapore, however, is expanding below this normal growth rate, and this is due to the slowdown in the global economy, the ongoing restructuring in China, and the troubled times faced by sectors such as offshore and marine, shipping and transport services, and electronics.
But the state of the economy isn't as bleak as some perceive it to be, and Mr Tharman cited a number of industries that are doing well, including tourism, healthcare and professional services.
The major government infrastructure projects such as the upcoming Sengkang General and Community Hospitals and the Thomson-East Coast MRT line have helped create many jobs and business opportunities.
But even when all these are added together, Mr Tharman said that Singapore remains in a period of unusually weak growth.
"This year, and I think very likely next year as well, (growth will be) below our new normal of 2 to 3 per cent. We have to prepare for the fact that growth is now below 2 per cent for a couple of years," he added.
Unemployment, which currently stands at 3.1 per cent for citizens, is "very likely" to go up further because of this slower growth of below 2 per cent, and Mr Tharman stressed the top priority is to ensure the rise in unemployment does not become structural.
This means reaching out to every displaced worker and helping them get a new and suitable job quickly. He cited how the number of people looking for work was roughly the same as the available vacancies - about 50,000 - and the "big task" at hand is to match them well and reduce the mismatch in skills.
The government's two new statutory boards - Workforce Singapore and SkillsFuture Singapore - will start operations next Tuesday and they will lead the effort to carry out this task, he said.
Mr Tharman also revealed that the government will expand its reliance on "private placement providers", which are HR and recruitment firms that will get incentives to match people to the right jobs.
As far as companies are concerned, Mr Tharman said there are still many opportunities in Singapore and the region, and it is crucial to build capabilities and competitiveness to tap them.
"In the short term, we have to deal with the problems that workers and companies face. For SMEs, this is a time to retool, and a time to build up capabilities," he said, calling on more SMEs to take full advantage of the various government schemes and grants available to them.
"The government is using this period, this tough economic climate, to help SMEs to retool and make sure that everyone who's displaced from a job can get back in as soon as possible," he said.
This article was first published on September 29, 2016.
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