Published Date: 02 December 2022

Remarks by Mr Tharman Shanmugaratnam, Senior Minister and Chairman of MAS, at the International Finance Forum 2022 Annual Meeting Opening Session, on 2 Dec 2022

It's a real pleasure to be with you at this opening session of the 2022 International Finance Forum.

It comes at a very difficult time for the world in many respects. We have really entered a profoundly uncertain era – uncertain economically, uncertain with regard to our ability to deal with climate change, future pandemics, and the other challenges of the global commons, and uncertain geopolitically. It all comes together, but we have to find, amidst these uncertainties, new bases for optimism.

We have to create opportunities to compete and collaborate between nations at the same time. We have to find new bases for stability and for growth. And it can be done by working multilaterally to strengthen existing institutions and build new mechanisms of multilateral cooperation. We can address the challenges of the day.

We know what the problems are. We know that the global economy is going to go through a very difficult period. Even after what we've been through COVID-19 and over the course of last year, we know that the year to come is still going to be a very testing year. Inflation will be higher than normal for a period of time, possibly for quite some period of time. Growth will be weaker. And we will face a situation where financial conditions will be tighter.

Apart from central banks having to tame inflation, apart from us having to try to avoid a deep recession in many parts of the world, we also have to adjust to the fact that we have moved past an era of unusually low interest rates – in fact, negative real interest rates in a large part of the world – and excess liquidity. And whole economies and business models that have been based on low interest rates and excess liquidity will now need to unwind strategies, and that will see some instability, some pain, some casualties, and we’ll have to manage that well.

But that’s the economic dimension. Our largest challenges have to do with the global commons.

We have to accelerate efforts because we are losing this race against climate change. And we are losing the race of preparing for the next pandemic, which will come and may very well be more dangerous than the COVID-19 pandemic that we have gone through and are still going through.

To address these challenges, we have to stop thinking nationally, and think internationally. We have to stop thinking short term, and think long term because the cost of inaction in tackling climate change and future pandemics is much larger than the cost of action today. The cost of inaction, because of future crises, future pandemics, is far larger than the cost of investing today to prevent these crises. And that requires a basic shift in mindset – thinking long term and not short term.

But we also have to find a way of adjusting to a multipolar world, in ways that are not constantly unstable, and constantly full of friction. We have to avoid escalating tensions between nations. A multipolar world is irreversible. It's an achievement because it's how the global economic system has allowed for new poles of strength in the global economy. It is an achievement, but we have to prevent a more multipolar world from becoming a polarised world. That has to be our central challenge.

We have to make the best use of our multilateral institutions including the international financial institutions – the World Bank and the other multilateral development banks, and the IMF. These are valuable institutions. We have to strengthen them, resource them well and reform them so that they can perform their roles in a world that is very different from where we were when we first created those institutions.

Those reforms are doable, and our ability to provide them with strong, better resources is also doable when spread across countries in a fair and sustainable fashion. The constraints are not financial. The constraints are in our mindsets, and our ability to shift from short-term thinking to long-term thinking and to shift from national thinking to multilateral thinking.

We can achieve these shifts, we can build new bases for optimism, even in an uncertain world, and a profoundly risky world. We can in fact, solve problems if we work together.

Thank you very much.