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Download The Global Financial Crisis – Implications for Asia Dr Tony Tan Keng
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The Global Financial Crisis – Implications for Asia Dr Tony Tan Keng Yam Deputy Chairman & Executive Director, GIC 6 August 2009 Increasing signs of stabilization and recovery Three Post Crisis Trends: Deleveraging Recessions with Financial Crises Take Longer to Normalize Source: IMF Three Post Crisis Trends: Deflation… Source: IMF …Then Inflation • Pressure to go slow when withdrawing fiscal and monetary policy • Deteriorating fiscal positions could put central banks under pressure • Global labour supply will start to be less salutary • Pressure from natural resources given EM demand • Aging populations, uncertain productivity gains Source: IMF Three Post Crisis Trends: Shift to EM Source: GIC Asia has benefited from trade Source: CEIC, GS Global ECS Research Asia has strong fundamentals and savings Source: CEIC Asia’s banks are not leveraged Source: Nomura Research Easy Liquidity Poses Risks to Asian Policymakers US Interest Rates, Asian Currencies and Equities 2007 - current 6.0% 160 140 5.0% 120 4.0% 100 3.0% 80 60 2.0% 40 1.0% 20 0.0% 31/01/2007 Source: Datastream 0 31/01/2008 31/01/2009 Fed Funds Target (%) Asia Weighted Dollar Exchange Rate (1988=100, coeff variation, 24mth rolling) MSCI EM Asia relative to MSCI World (Jan 07 = 100, rhs) Risks and Challenges • Further weakening of the US economy • Weak US consumption fundamentals • Increased protectionism Is trade good for your country?
