Singapore ready to stimulate ailing economy, says PM Lee

The Singaporean economy has slowed down this year, according to Prime Minister Lee Hsien Loong. (Bloomberg pic)

SINGAPORE: Singapore’s government stands ready to stimulate the economy, Prime Minister Lee Hsien Loong said on Thursday, after some of the worst economic data in years prompted warnings that a recession may be looming.

In an annual speech ahead of Friday’s national day, Lee also said the city-state – which is seen as a bellwether for global growth but also has one of the world’s fastest ageing societies – would raise the retirement age.

“This year our economy has slowed down. Global demand and international trade have weakened,” Lee said.

“This has affected our manufacturing sector and trade-related services. In particular, we are feeling the worldwide cyclical downswing for electronics,” he added.

“Should it become necessary to stimulate the economy, we will do so,” Lee said, without giving further details.

Data next week is expected to confirm Singapore experienced its slowest pace of expansion in a decade in the second quarter on a year-on-year basis.

It is also expected to show a near 3% quarter-on-quarter contraction, reaffirming the risk of a possible recession later this year.

Singapore’s central bank is widely expected to ease policy when it meets for the second of its semi-annual policy announcements in October, if not in an off-cycle move beforehand.

With the world’s second-fastest ageing society after South Korea, the global financial hub is growing more dependent on older residents as birth rates fall and foreign labour is curbed.

The government reached a pact with trade unions and employers this year to raise the retirement age, now 62, and the re-employment age – which requires companies by law to offer eligible employees the option of continuing to work until they are 67.

In his speech on Thursday, Lee confirmed plans to raise the retirement age but said the details would be revealed in a speech on August 18.