HEAVILY exposed to the global economy, Singapore will see an economic slowdown that will last not just one or two quarters, but 'several quarters', said Finance Minister Tharman Shanmugaratnam on Sunday.
In tandem, unemployment is expected to increase.
But he also sounded a note of optimism, saying with its strong fundamentals, Singapore will ride out the crisis - and emerge better than most countries.
Mr Tharman was addressing some 300 grassroots leaders and residents of Toa Payoh East, after a three-hour walkabout which saw him, among other things, opening an exercise corner for the elderly.
Accompanied by MPs from the Bishan-Toa Payoh GRC including Toa Payoh East MP Josephine Teo, it was his first ministerial walkabout since taking charge of the finance portfolio this year.
During the 80-minute dialogue that followed, residents asked 13 questions ranging from foreign talent to greater rewards for grandparent caregivers.
But the focus was on the darkening economic outlook amid increasingly gloomy news from the United States - and the world - on what some have termed 'the worst financial crisis since the 1930s'.
So grassroot leader Raymond Teo, 39, wanted Mr Tharman's opinion of the US$700 billion (S$1 trillion) package to bail out the US troubled financial institutions, and how it impacts Singapore.
The minister expressed relief the US Congress had supported the package as it is a step forward.
But it is 'not a full solution' in addressing the real malaise - shortage of capital in the banks, he noted. This, the new US President would have to work out when he takes over in Jan.
And because the problems are 'deep and extensive', it will take 'a year or two' before the world emerges from the crisis, he later told reporters.
Meanwhile, the crisis has moved into what he calls 'its second phase'.
'It's no longer just a financial crisis,' he said. 'It is now an economic crisis.'