Q4 economic performance likely to mirror Q3's: Hng Kiang

The performance of the Singapore economy in the fourth quarter of 2012 is likely to mirror that of the previous three months, said Trade and Industry Minister Lim Hng Kiang on wednesday.

And should the eventual Q4 numbers turn out as expected, the overall forecast for the year will remain at "about 1.5 per cent", he told reporters in New Delhi as he wrapped up a three-day working visit to the Indian capital.

According to preliminary estimates released last month, the economy expanded by 0.3 per cent on a year-on-year basis in the third quarter, following a 2.5 per cent increase in the preceding quarter. On a quarter-on-quarter seasonally adjusted annualised basis, the economy contracted by 5.9 per cent in Q3, after growing by 0.5 per cent in the previous quarter.

As for 2013, Mr Lim said that Singapore would have to "brace itself" for a difficult year ahead given the difficulties faced by many developed markets around the world.

The Singapore government has forecast growth for next year to come in at 1-3 per cent, which is "slightly below potential" for the Republic.

"If you look at the developed markets, the growth is below their potential. And for the emerging markets, growth is still holding up but the strength cannot counteract the slowdown in the developed markets. Overall, I think for global growth, the estimate is that it will be below potential," said Mr Lim.

And beyond these external factors, Singapore also has several internal domestic adjustments to make, such as having to reduce the inflow of foreign workers over the coming years.

This, Mr Lim added, was something that Singapore had to explain to its foreign partners.

"We have to explain that conditions have changed. We have been very open and we continue to be open. But at the same time, we cannot expect the flows to Singapore to amount to one million foreign workers over 10 years. Those kinds of levels of flows are not sustainable."

"Many of the companies do understand and we want to create as much understanding and appreciation of our policy change. We try to give as much certainty as possible, we give longer lead times for adjustments. I think the companies are coping reasonably well."

Mr Lim was in New Delhi to attend both the Asean-India Ministerial Meeting and the second India- Asean Business Fair and Business Conclave events.

Giving his take on the trade relationship between India and Asean, Mr Lim said that both sides have been "happy" with the way things have progressed so far.

The leaders of India and Asean, including Singapore Prime Minister Lee Hsien Loong, are widely expected to announce during a special summit later today that negotiations for a new India- Asean free trade pact on services and investment have been concluded.

There is a new target for two-way trade to reach US$100 billion by 2015, up from about US$80 billion that was recorded last year.

Mr Lim said that this latest India-Asean FTA would be a "good complement" to the Comprehensive Economic Cooperation Agreement (CECA) that was inked between Singapore and India in 2005.

India was Singapore's 10th largest trading partner last year, with total trade amounting to a record high of S$35.4 billion (S$ 98 billion), a 16 per cent increase from the previous year.

Singapore is the second largest investor in India, with S$12.3 billion invested as at 2010 in sectors such as ICT, manufacturing and financial and insurance services.

India is the eighth largest investor in Singapore, with investments growing from S$1.3 billion in 2005 to S$24.1 billion in 2010.

Mr Lim noted that there were many sectors in India that had "high promise" for Singapore companies, particularly in the areas of urban solutions, infrastructure and logistics.

There was also much potential in catering to the needs of the growing middle class in India, a group that has a high consumption rate, he said.

As at 2011, more than 450 Singapore companies are operating in India and more than 5,450 Indian companies are present in Singapore.