SINGAPORE, Oct. 20 (Xinhua) -- The Singapore government Monday said the escalating global financial crisis and the global economic slowdown have already affected its real economy and local companies.

    However, Trade and Industry Minister Lim Hng Kiang told Parliament that Singapore's financial and economic fundamentals remained sound, and Singapore could "weather the current storm, and emerge strong and resilient," local TV Channel NewsAsia reported.

    Advance estimates indicated that Singapore's gross domestic product (GDP) declined by 0.5 percent in the third quarter and on an annualized quarter-on-quarter basis, the economy had seen two consecutive periods of negative growth which meant a technical recession.

    The minister said given the deteriorating external climate and the volatile financial situation globally, growth would likely remain weak for some quarters to come.

    The Singapore government had revised the GDP forecast for this year to around 3 percent.

    The economic slowdown has affected the job market, said Lim.

    "The slowing economy and more cautious hiring have contributed to an increase in the overall unemployment rate from two percent in March 2008 to 2.3 percent in June 2008," Lim was quoted as saying.

    Lim said that the unemployment rate for this year is likely to be higher than the record low of 2.7 percent last year.

    He also pointed out that the financial turmoil has hit Singapore's property, retail and tourism industries.

    For the construction sector, Lim said it is expected to grow by7.8 percent in the third quarter of this year, falling short of the 18 percent growth registered in the first half of 2008.

    As for inflation, Lim said, "I must caution that inflation will continue to be sticky in the next few months because some of these costs have a certain amount of lag. But going into the next year, over the next 15 months...our inflation will revert to the more normal 2 to 3 percent that we saw previously."