A GLOBAL depression is unlikely to happen because governments have learned lessons from the world economic meltdown in the 1930s, Singapore Prime Minister Lee Hsien Loong said on Friday.
Mr Lee, speaking at a lunch hosted by Singapore's Foreign Correspondents Association, repeated predictions that the city-state's current recession would last a year, followed by several years of slow growth.
'I think a global depression is not on the cards,' said Mr Lee, who previously served as finance minister and chairman of the Monetary Authority of Singapore, the de facto central bank.
'The governments have learned lessons from the 1930s and they will not repeat the same mistakes, so this is not the end of the world.'
Singapore went into recession in October following two successive quarters of negative gross domestic product growth. The official growth forecast for 2008 has been drastically slashed to 2.5 per cent, from 7.5 per cent in 2007.
'I think that the recession, in the best of the experts' judgement, may last a year, maybe if we're lucky, three quarters,' Mr Lee said.
'But the recovery from the recession is likely to be weaker than from previous recessions and we must be prepared for several years of low growth,' he added.
Mr Lee said Singapore must brace itself for 'several years of slow growth' as it is hit by the fallout from the world economic crisis.
He also said he expected unemployment to rise, particularly in the manufacturing industries, which account for about a quarter of its economy.
With major demand centres including the United States and Europe also in recession, the outlook for Singapore for next year is bleak, economists have said.
Last month, the government pledged to spend $2.3 billion to help firms get credit and said it would run a larger budget deficit to support an economy that it said could shrink 1 per cent in 2009 and at best would expand 2 per cent.
Mr Lee said the government would partly rely on construction projects to try to help growth with the cost of projects coming down.
'It makes sense for us to take advantage of that,' he said.
The government plans an expansionary January budget and is trying to diversify away from manufacturing into service industries such as finance and tourism. -- REUTERS
