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SINGAPORE: Minister Mentor Lee Kuan Yew says he expects the world economy to pick up before the US mid-term elections at the end of next year.
This is because a battered US economy will cost the current government votes.
His assessment differs from that of US Federal Reserve chairman Ben Bernanke and Treasury Secretary Timothy Geithner -- that the economy will pick up at the end of this year or early next year.
Mr Lee said "My own guess is that recovery will not take place till the US Congress, both the lower and the upper House and Senate, vote in vast sums of money to clear all the bad debts and toxic assets."
He says to do that in one tranche will make voters angry but by the middle of next year, in order to win votes, the US Congress will have to take the step of pumping in more public funds to boost the economy.
In a dialogue with about 100 senior and new members of the Community Party of Vietnam in Hanoi, Mr Lee says the world economy will pick up when the US recovers.
And when that happens, there will be slower growth but enough to allow all countries, including Singapore and Vietnam, to resume trade.
On Vietnam, he expects the country's economy to continue growing, although at a slower rate of four to five per cent, as its economy is not too dependent on exports.
Countries like Singapore which depend heavily on imports and exports however, are not as fortunate.
Mr Lee says Singapore will have to find its way out of the doldrums and cannot depend on anyone for help, unlike Hong Kong which has China's support.
But he is confident Singapore will survive the crisis and is optimistic its economy can recover just as quickly as it has declined because of its globalised economy.
He told his audience that Singapore is taking this opportunity to upgrade its workforce to a higher value chain, especially in growth areas that have little competition from China and India.
One area is in research and development which will attract big pharmaceutical companies.
Mr Lee said: "There are many such openings for us where China and India will take some time to catch up. While they can get individuals to be as good as us, it is difficult for them to get their systems to be as good as ours. We have more transparent systems, more intellectual property protection, have more laws observed and the investors feel safe to invest in Singapore."
Mr Lee also met Vietnam's Communist Party General Secretary, Nong Duc Manh, and discussed the current economic situation.
They also talked about ways to further cooperation and friendship between their two countries.
- CNA/yt
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