Global economic crisis will take more than a year to unravel: Tharman

Global economic crisis will take more than a year to unravel: Tharman
By Imelda Saad, Channel NewsAsia

SINGAPORE: Singapore's Finance Minister Tharman Shanmugaratnam says it will take more than a year for the global economic crisis to unravel.

Speaking to Bloomberg Television on Thursday, Mr Tharman says the world has yet to see the worst of the downturn, as banks are still in contraction mode and focused on recapitalisation, rather than lending.

He said, "The foreign banks are still in the mode of contraction. I think every large global bank is still looking at building up its capital, much more than it's looking at extending new loans. So we are still at that phase of the crisis where recapitalisation is still the priority and estimates of the extent of bad assets on their books are still on the upswing. So, we haven't seen the worst yet."

Mr Tharman says that is why it is a good move for governments in the West to help these banks recapitalise and incentivise lending.

The minister also responded to criticism from some quarters that Singapore's economic growth model makes the country vulnerable to swings in global demand.

Mr Tharman says the country’s future and fortunes are tied to global markets.

As for investments by Temasek Holdings and the Government of Singapore Investment Corp in overseas banks, Mr Tharman says they have so far been so good, performing credibly by international standards.

- CNA/yt

- wong chee tat :)