MM Lee uncertain how a possible US recession might affect Singapore

Singapore’s Minister Mentor Lee Kuan Yew said he is not certain what impact a possible US recession will have on Singapore.

Although it is not clear whether financial markets will take up to two years to recover from the ordeal, Mr Lee said he feels that China and India may provide some cushion for the slowdown in the US.

Asian stock markets took a beating early this week amid mounting concerns of a possible US recession.

As fund managers adjust their portfolios, the minister mentor said the real strategy is to look beyond the actions of investors and study how each economy performs amid a drop in American demand.

“I do not believe the Chinese economy is immune to a US slowdown, nor is the Indian economy. But I believe they are now much less… influenced by US recession because they’ve got enough going in their own internal economy. They can increase investments in infrastructure; they can increase consumption; they can increase all their projects and keep the economy buoyant,” he said.

Wrapping up his five-day visit to Saudi Arabia, Mr Lee said if China can maintain economic growth at around eight to nine per cent a year, then it could weather the economic storm well.

How well Singapore does, he said, will depend on how other economies fare, though he feels Singapore should be able to ride on the healthy performance of China and India.

“Our total trade is 300 per cent of our GDP (gross domestic product). So when the external trade goes down, you tell me how we buffer ourselves. But the external trade may not go down so dramatically because of India and China,” he said.

Mr Lee said the current situation is unlike the Asian financial crisis in 1997, when China and India were almost immediately affected. – CNA/ac

Source : Channel NewsAsia – 23 Jan 2008

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