Dr Tony Tan, the deputy chairman of the Government of Singapore Investment Corporation (GIC), has clarified that recent comments made on the world facing its worst recession in 30 years is just one of three scenarios GIC is contemplating.
It is not the GIC's forecast for the global economy.
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The other two are an optimistic scenario where there is a recession in the US or globally, with an end to the credit crisis; and, a middle scenario where there is a mild US recession but no global recession. Speaking at the GIC Staff Conference earlier this week, Dr Tan had said the world "could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years."
He had also said that this could be mitigated if decisive and timely actions are taken by policy makers in the United States and elsewhere.
Putting those remarks in perspective, Dr Tan said that as part of GIC's risk management discipline, it continuously reviews a range of economic scenarios which can affect its investment strategy.
Dr Tan explained, "In normal times, there will be a central scenario with a dominant probability, with the optimistic and pessimistic scenarios as outliers, each with much lower probability. However, in light of the current fluid and uncertain times, the probability of the pessimistic scenario, while not the highest, has risen to a level that warrants serious consideration by GIC."
And this was why he had highlighted the scenario at the conference. - CNA/ir
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