Speaking to reporters on his way back from Riyadh, Saudi Arabia on Wednesday, Father Minister Mentor Lee Kuan Yew told the press: “I do not believe the Chinese economy is immune to a US slowdown, nor is the Indian economy.” As for effect on Singapore’s economy, he said, “Our total trade is 300 per cent of our GDP (gross domestic product). So when the external trade goes down, you tell me how we buffer ourselves.”
Meanwhile at a breakfast meeting with 40 businessmen from the French Business Confederation as he wrapped up his 3-day official visit to Paris, Son Prime Minister Lee Hisen Loong is singing a different tune, claiming Singapore and Asia can weather the storm, should the US go into a recession. PM Lee also said the economies of China and India will continue to grow despite what happens in the US, adding: “…in Asia, I think we are stronger and better prepared and we will weather it.”
For the significant portion of the world’s economic movers, shakers and interpreters gathered in the Swiss mountain town of Davos for the annual meeting of the World Economic Forum just as markets from Mumbai to Madrid were freaking out, the writing is already on the wall:
“The debate is not whether we’re going to have a soft landing or a hard landing in the U.S. but how hard the landing is going to be,” says Nouriel Roubini, professor of economics at New York University. He sees a sharp, possibly year-long U.S. recession and a global slowdown. Despite Asia’s torrid growth, consumers in China and India accounted for only $1.6 trillion of the world’s spending last year, a tiny fraction of the $9.5 trillion spent by Americans, according to Stephen Roach, head of Morgan Stanley’s business in Asia. It’s impossible to pull U.S. spending back without sending ripples through the rest of the world.
What has become evident is that globalization can’t insulate us from recessions. Or justify 21% increases for multi-million dollar “top talents.”