Thursday, February 29, 2024
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Singapore’s Deputy Prime Minister, Lawrence Wong, has raised concerns about the potential consequences of excessive de-risking measures on the global economy, warning that it could result in fragmentation and decoupling. Speaking at a recent conference, Wong emphasized the need for a balanced approach to managing risks while maintaining economic interdependencies.

In his keynote address, Wong acknowledged the importance of risk management to safeguard economic stability and resilience. However, he cautioned against an overzealous pursuit of de-risking strategies, which could inadvertently lead to a fragmented and disconnected world economy.

“The process of de-risking, if taken too far, could have unintended consequences. It could result in a fragmented and decoupled world economy,” Wong stated firmly. He argued that excessive de-risking could disrupt global supply chains, hinder economic growth, and weaken international cooperation.

Wong pointed out that interconnectedness and interdependence are crucial drivers of economic progress, facilitating trade, investment, and innovation across borders. He stressed that countries should not retreat from these interconnected networks but rather find ways to manage risks effectively without jeopardizing global economic unity.

“Instead of turning inwards, we should focus on building robust risk management frameworks that foster resilience while preserving the benefits of a connected world,” Wong urged. He emphasized the importance of striking a balance between managing risks and maintaining the open flow of goods, services, and capital.

The Deputy Prime Minister’s cautionary remarks come amidst a backdrop of increasing economic uncertainties and geopolitical tensions. In recent years, there has been a growing trend towards protectionism and a reevaluation of global supply chains, prompted by factors such as trade disputes, technological disruptions, and the Covid-19 pandemic.

Wong acknowledged that risks are inherent in the global economic system and need to be addressed. However, he cautioned against an excessive retreat from global interconnectedness, urging countries to resist the temptation to isolate themselves and instead work towards enhancing cooperation and managing risks collectively.

As the global economy continues to grapple with various challenges, including climate change, digitalization, and geopolitical shifts, Lawrence Wong’s remarks serve as a reminder of the delicate balance required to navigate these complex dynamics. The world’s economies must find ways to manage risks without sacrificing the benefits of a connected and interdependent global economy.


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