- POSTED: 04 Jul 2014 22:49
- UPDATED: 05 Jul 2014 11:19
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam says the real risk is prolonged slow growth and high unemployment in advanced economies.
SINGAPORE: Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam says while there are tail risks in the major economies, he does not see a hard landing in the global economy.
In an hour-long dialogue at the DBS Asian Insights Conference 2014, Mr Tharman said the real risk is prolonged slow growth and high unemployment in advanced economies.
Responding to a question about the shift of economic growth from the West to the East, DPM Tharman says the easy phase of this shift, driven by strong domestic consumption is "more or less over".
Mr Tharman said, "The more difficult phase that involves tackling entrenched interests, that involves some important but painful liberalisation and reforms has now started and requires tremendous political commitment."
He said domestic consumption drives "spurts of growth" but is not the basis for long-term growth, which rests with the way people do business, upgrading skills, spurring innovation, and therefore having productivity growth.
However, he says productivity growth in developing Asia outside in China, is well below potential. In terms of the level of output per worker, it is about 10 to 30 per cent of the US or the level of advanced countries, and Mr Tharman says there is tremendous scope for catch up.