SINGAPORE'S economy is set on a course of continuing stabilisation, according to Prime Minister Lee Hsien Loong.

'We do not expect another dip in the economy in the immediate future,' he told a media briefing yesterday, ahead of next week's Asia-Pacific Economic Cooperation (Apec) meetings here.

The fact that the economy grew by 0.8 per cent in the third quarter over the same period a year ago - the first year-on-year expansion after three quarters of decline - was 'nothing to crow about, but something to be grateful for', the Prime Minister said.

Singapore's growth beyond this depends to a considerable extent on what happens in developed countries, he said.

So far, the recovery in countries such as the United States and in Europe has been driven largely by government stimulus packages. When such spending ceases, it will take some time to create the 'self-sustaining growth' necessary to replace it, added Mr Lee.

The question of how to get Americans to save more and Asians to spend more still had to be resolved, and problems with the financial system - including the toxic assets that have all but disappeared from the headlines - have yet to be ironed out, he added.

'Therefore I don't see a rapid dramatic expansion back - at best a steady gradual recovery, giving us time to sort these problems out,' said Mr Lee.

If they are not resolved and stimulus spending continues, a new problem may emerge in the form of a bubble.

For now, he said the economy is 'out of the trough of the spasm, which we experienced in the beginning of this year'.

From the 'very, very bleak' economic position that Singapore and many other countries were in during January, things have now returned to stability, he said.

This is partly because governments around the world responded effectively to the crisis, and because the US took extraordinary measures to prop up its banks and financial system.

Within Asia, there is also a certain momentum and drive innate in the economies, particularly in China and India, which also contributed to the economy returning to growth, said Mr Lee.

- end of ST article