Singapore's Heng Says Sustainability Of Recovery Is Not Clear
10/26/2009 7:08 AM ET
(RTTNews) -
Monday, Managing Director of Monetary Authority of Singapore, Heng Swee Keat said managing the cyclical recovery of Asian economies amid uncertainty presents several challenges. While the outlook has improved, the sustainability of the recovery is not clear at this point, Heng added.
"A withdrawal of government stimulus measures too early risks stifling the recovery, while a withdrawal too late could result in inflationary conditions. A series of carefully calibrated actions will be needed," he said in Singapore.
Many analysts assessed that the emerging economies will grow considerably better than advanced economies in coming years. Re-rating of assets in emerging economies and extremely accommodative monetary conditions globally are set to increase inflow of funds to many emerging economies, including those in Asia, in search of yields, said Heng. He added that managing this inflow so that it supports growth, and not drive excessive asset inflation, will be challenging.
Heng expects Asia to grow more slowly compared to pre-crisis days, when external demand from advanced economies weakens. To maintain growth, Asian economies with large domestic markets should continue with structural reforms to boost domestic demand.
According to Heng, Asia's bigger challenge lies less in having more stringent regulations, but more in development and innovation of financial services to complement its economic development. Further, he said saving rates in Asia are high, but these have to be efficiently intermediated to support productive investments.
by RTT Staff Writer
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