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S’pore Finance Minister see economy bottoming by Q3 2009

Posted on: March 26, 2009


Reuters – Wednesday, March 25

SINGAPORE, March 24 – Singapore’s economy, in its worst ever recession, could reach a bottom in the next six months, its finance minister said on Tuesday, striking a slightly optimistic note after the U.S. plan to deal with toxic assets.

“On current indications we expect to see a bottom in the economy within the next two quarters. But growth thereafter is likely to remain weak till at least the end of the year, and possibly 2010 as well if there are no clear signs of recovery in the global economy,” Tharman Shanmugaratnam told business leaders in a speech.

The comments, while cautious, contrast with a slew of recent warnings from government leaders after the trade-dependent economy has been hurt by slumping global demand.

Singapore’s economy could shrink by 4.9 percent this year, its worst ever, a Reuters poll of economists showed earlier this month. Some economists have since revised estimates downwards, with Goldman Sachs expecting an 8 percent contraction.

“The just-announced U.S. Treasury plan for dealing with bad assets in the U.S. banking system has brought clarity,” Tharman said. “But the underlying economic problems remain, and only the most optimistic observers expect them to be solved within a year.”

Tharman said the Southeast Asian city-state, a centre for financial services, would emerge stronger from the crisis, given it was looking for new ways to make it easier for firms to do business. The government cut corporate tax in its January budget and offered firms cash to preserve jobs.

“As with every major crisis, there will be a rearranging of corporate footprints around the world. It will play to Singapore’s advantage.”

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