Don't worry. The situation isn't so bad. It could be worse.

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tufguy

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"Don't worry. The situation isn't so bad. It could be worse."

What does "could" mean here? "Might" or past of "Can"?

Do we say "The situation was bad but it could have been worse"?

Please check.
 
"Could" here means it is possible. There is a possibility of it being worse.
 
Yes. Definitely.

Okay, it is a kind of future indication. It is just like "The situation is bad but it might get worse". Am I correct?

"The situation was bad but it could have been worse". We are saying it could have been worse. If we have to use the same expression with present tense then what do we need to say? "The situation is bad but it could have been worse". Is it correct? I was thinking of "could" here but you are saying it is going to work as future indication.
 
For present tense, as Matthew indicated, you can say:

The situation is bad, but it could be worse.
 
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