Singapore's labour market has stabilized, meaning that the worst is over for the economy, said Prime Minister Lee Hsien Loong.

Though the third quarter should be fine, the outlook beyond it is still unclear, he said, adding: "No signs of Christmas orders pouring in yet."

But Lee is confident that the nation is prepared to pick up strongly again because of its comprehensive and decisive response to the downturn. Though the economy contracted 6.5% in the first half of the year, it was not as bad as feared.

"The eye of the storm has passed," Lee said.

Latest figures show the economy grew 20.7% in the second quarter, which was the first positive quarter after four quarters of contraction in a row.

Lee noted that when the recession arrived, it was worse than anyone had expected. But the Government took action, when Lee gave his overall assessment of the state of the economy, that the S$20.5 billion Resilience Package to tackle the recession had worked.

The Resilience Package included subsidy schemes that helped save jobs and cut costs. The subsidies for employers' wage bills as well as workers' training helped many to keep the same pool of workers although their output had fallen.

Lee expects a slow global recovery: "It will pick up, but not in a hurry." But, he added, Singapore can grow by sharpening its skills and expanding its market share. Economists also said the state of the Christmas orders, which are important for local manufacturers for the festive period, will be clearer by the end of next month.

[via TheMalaysianInsider]