Singapore urges Asian economies to build up own sources of growth

Nov 11, 2009, 4:44 GMT

   Singapore - Singapore on Wednesday called on Asia's mostly export-reliant economies to build up own sources of growth as the global recession had changed the patterns of demand in the world.

   'As consumers in the United States seek to build up their savings or pay down their debts, Asia will need new, compensating drivers of demand over the medium term,' Singapore Finance Minister Tharman Shanmugaratnam told a seminar on the sidelines of the annual summit of the Asia-Pacific Economic Cooperation (APEC).

   'The recovery will not bring us back to where we were before the crisis,' he said, noting that the pattern of demand had shifted at least for the next decade.

   'Hence, the key challenge for Asia is to build up new, self-sustaining sources of growth, within economies as well as across the region,' Tharman said.

   Growth had to come increasingly from domestic demand with higher rates of either investment or consumption, in some cases both, the minister said.

   'That's the new mantra, but it's true,' Tharman added.

   When the world economy recovers, he said, 'higher investment and consumption within Asia will in turn avoid a return to large and unsustainable global current account imbalances.'

   Tharman called for reviving investment after investment rates decreased in most Asian economies - with the exception of China - following the Asian crisis in the late 90s.

   'The revival of investment will provide the basis for a new era of growth that will be based not only on the rise of the Asian consumer, which is itself happening, but on more efficient, more productive and more connected Asian economies,' the minister said.

   He urged for more investment in infrastructure in the region, as 'Asian infrastructure is where the under-investment is most pronounced.'

   'Investing in Asian infrastructure is not a silver bullet for curing current account imbalances, but it comes close,' said Thatman.