(Oct 3): Singapore’s economy probably hasn’t slid into recession yet, though the government is monitoring conditions closely and will step in with support measures if needed, said Indranee Rajah, minister in the Prime Minister’s Office.

“We’re not new to difficult economic situations, we’re not new to recessions,” Rajah, who is also Singapore’s second minister for finance and for education, said in an interview Thursday with Bloomberg Television’s Juliette Saly. “We don’t think we’ve gone into a recession as yet, but we’re keeping a very close eye on it.”

Export-reliant Singapore has acutely felt the pressures of the US-China trade war, with officials lowering 2019 growth forecasts almost to zero after the economy contracted an annualized 3.3% in the second quarter from the previous three months. Third-quarter figures are due this month.

“If there is a need to, and the government needs to step in with assistance, we will do so,” Rajah said. “If we need some safety nets and buffers, then our agencies will have to step in.”

The economic strain throughout the region isn’t likely to keep governments from accelerating plans to address massive infrastructure needs, Rajah said. Singapore is moving forward with efforts to standardise language around project financing and to help train government officials on how to draw in private-sector support for such deals, she announced this week at Singapore’s Asia Infrastructure Forum.

“In a global environment like this, you would be looking for something you can put your money into, which hopefully isn’t affected by trade wars and where you can get your returns,” she said.

Singapore is finding its niche as a legal hub to help build infrastructure deals as “bankable” and win more private-sector support. Developing Asia requires US$51 trillion ($70.5 trillion) in infrastructure investment through 2040 just to keep up growth momentum, according to the Group of 20’s Global Infrastructure Hub.

In her capacity as second minister for finance, Rajah said the budget due for release early next year likely will include further measures to boost productivity and innovation and help workers adapt to advanced technology. On the social-development side, the government probably will expand on plans to raise subsidies for preschools and other family support, she said.

With an election looming, Rajah said Singapore needs a government that can provide stability, grow the economy, focus on jobs and build a nation for the future.

While a weakening economy and job losses may worry voters, Rajah said the current downturn was due to external factors, and Singaporeans will judge whether officials have done enough to mitigate those pressures.

The government has been monitoring labor-market measures closely for any sign that weakness is spreading beyond the ailing manufacturing sector. So far, retrenchments haven’t significantly increased.

Rajah also made the following comments in the interview:

Hong Kong

“We feel very much for Hong Kong” as a fellow financial center relying heavily on trade and moving into advanced technologies. “We hope they will be able to resolve their situation,” which will be “good for everybody, ourselves included.” Rajah said she hasn’t seen “significant shifts yet” in terms of benefits accruing to Singapore as a result of the tensions in Hong Kong.

Infrastructure

“The project is supposed to finance itself,” she said. “If you don’t do that at the outset and you don’t make sure the project finances itself, then you’re going to have a problem.”

Asia over the next decade likely will build a more solid secondary market whereby investors can buy stakes in a project after its construction, Rajah said. “Infrastructure as an asset class is relatively a new thing. Asia is still new,” she said, “and I think you will have a strong secondary market, but not quite now.”

Resilience

“We’ve been through many recessions,” Rajah said, adding that during the global financial crisis “we were one of the very few countries that came through relatively unscathed despite the fact that we are a financial center.”