PM Lee: Govt working on Budget suited to Singapore’s needs
He also says the Republic is studying whether Korea-Singapore free trade agreement can be upgraded
The Government is working towards preparing a Budget that will be strong, and suitable to the state of the world and what the Singapore economy needs, Prime Minister Lee Hsien Loong told reporters at the end of his five-day visit to South Korea.
He s a i d with major economies such as the US, China and Japan slowing down, it is not surprising that the Singapore economy has been sluggish too. But he cautioned against thinking the solution is pumppriming stimulus – trying to boost the economy through government spending and by lowering interest rates and taxes.
Instead, Singapore should take advantage of the slowness of the economy to redouble efforts at upgrading, training and productivity improvements, he said.
During Budget this year, Deputy Prime Minister and Minister for Finance Heng Swee Keat had announced that productivity in Singapore grew by 3.6 per cent a year in the past three years, higher than the 1.6 per cent a year growth recorded in the preceding three years, from 2012 to 2015.
The economy has slowed and is expected to grow between 0.5 and 1 per cent this year. Whether the country tips into a recession depends a lot on external factors, said Mr Lee.
“The risks seem to have gone up, but right now the indicators are mixed and unemployment is still low. Corporate profits are not as buoyant as before, the leverage is going up, corporate borrowing is going up.
“If a problem worsens between the US and China, or ...the current uncertainties continue, (the two countries) could go into a recession within the next 12 to 18 months. If that happens, we are in greater risk.”
The markets are in flux because they want to see what happens with Brexit, the US and China, he said.
“When you have a big cloud hanging over you, nobody wants to make commitments.
“So we have to understand that those clouds also affect our weather, our climate. And we are preparing for that.”
A major part of such preparations is next year’s Budget, Mr Lee said.
“(Mr) Heng Swee Keat as Finance Minister and all the other agencies are working towards preparing a Budget which will be strong and suitable to the state of the world and what the Singapore economy needs.”
Mr Lee, who was in Busan, said the two countries were studying whether the Korea- Singapore free trade agreement could be upgraded.
The expansion of a bilateral air services agreement, which came into effect yesterday, was also announced during his visit. This enables Singapore and South Korean carriers to operate any number of passenger and cargo flights between any destinations in both countries.
“I think it’s a good step for both countries, because it will mean more tourism, more business, and also enhance the status of Changi and Incheon as hub airports in our respective regions,” Mr Lee said.
He said the Government will look into offering Korean as a foreign language in schools as more people are interested in Korean movies and K-pop.
Third languages currently offered to students in Singapore schools include Japanese, French, German and Spanish.
But there are practical considerations, said Mr Lee, who pointed out that local exams are conducted by the Cambridge examinations syndicate.
“I’m not sure that they actually run a Korean language exam – we will think about this.”