Large foreign inflows are growth risk, says DPM Tharman

BALI/INDONESIA (Oct 12): Capital inflows are proving to be just as much a curse as a blessing, with the potential to harm economic growth, Singapore’s deputy prime minister said.

“There’s too much short-term capital flows dictating the future of countries,” Tharman Shanmugaratnam said in an interview with Bloomberg Television’s Haslinda Amin at the sidelines of the World Bank and International Monetary Fund meetings in Bali, Indonesia. “And countries have to respond by tightening policy far more than is warranted by domestic circumstances just to defend their currencies, and what suffers is growth.”

The deputy prime minister was speaking in his capacity as head of a G20 committee looking at how to reform the global financial system. The group released a report in Bali on Friday with proposals on how to boost cooperation and improve resilience in markets.

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