SINGAPORE - Innovation within and collaboration among nations can ensure that the global economy comes out of the current economic crisis intact, said Senior Minister Tharman Shanmugaratnam on Thursday.
Speaking at the Milken Institute's Asia Summit 2022 at the Four Seasons Hotel, Mr Tharman said there are no quick fixes for the crisis the world is facing today and economic and financial conditions will get worse before they start to get better.
"We have to innovate and collaborate our way out of this perfect long storm," he added.
The minister was referring to the worsening global economic outlook, with governments tightening their purses and central banks raising interest rates to fight off inflation, crimping growth, and the risk of causing more unemployment in the process.
"Once you have a situation like this, where inflation is already above tolerable limits, there are no solutions that do not involve a fairly sharp trade-off," he said.
Many economists are forecasting higher odds for a global recession in the coming months and tough times for nations that pay for their imports and debt obligations using the United States dollar, which has surged to its strongest levels in decades against most currencies.
Mr Tharman said there is a very broad range of economies, both emerging and developed, that are now going to be whipsawed by the combination of recession in advanced economies, slow growth globally, higher interest rates almost everywhere, and a stronger dollar.
However, he said, there is hope that some countries in Asia will weather the crisis better than others.
"Within Asia, two large population bases, India and South-east Asia, are now moving up. This is a new part of Asia that is emerging - and it is a positive force for the world."
He said both public and private sectors are needed to build up the innovation momentum and come up with solutions that make the world better and more secure.
New technologies, said Mr Tharman, who is also Coordinating Minister for Social Policies, need scaling up to drive the economic transition and give the world a fighting chance against the devastation of climate change.
But for this to happen, the world has to come together and reverse the trend towards looking inwards, he said.
"Collaboration is still possible. It is possible to strengthen multilateralism, even if it is imperfect. It is possible to get clusters of countries to come together."