The Singapore government said on Monday it expects unemployment to stay high for some time and growth momentum to slow in the second half of this year, though the risk of a double-dip recession is low.
The comments from the country's trade minister come after data showed last week that the economy contracted in the fourth quarter of 2009 having emerged from recession earlier that year. A second straight quarter of contraction would meet the common definition of recession.
“The risk of a return to recession is low in the absence of further financial shocks,” Minister for Trade and Industry Lim Hng Kiang told parliament.
“But growth momentum in the second half of 2010 may slow down as the effects of global fiscal stimulus measures and inventory restocking wane,” he said.
Singapore's recovery from its worst recession faltered in the fourth quarter as the economy shrank 6.8% on a seasonally adjusted and annualised basis, reflecting weaker manufacturing, preliminary data showed last week.
Singapore's government expects growth this year of between 3% to 5%, compared with an estimated contraction of 2.1% in 2009, the GDP estimates released last week showed.
Lim said pledges among members of the G20 and the Asia Pacific Economic Cooperation meant that protectionism, which could derail global trade and growth, had been largely kept in check.
“Growth in 2010 may also be derailed if creeping trade protectionism becomes more prevalent and causes global trade flows to contract again. But the likelihood of this scenario is low,” he said.