MercoPress. South Atlantic News Agency

Singapore warns of worst world recession in 30 years

Singapore's GIC, one of the biggest sovereign wealth funds, warned on Monday the world could be facing its worst recession in 30 years and that financial markets would be highly volatile.

Sovereign wealth funds from Asia and the Middle East have become more influential in financial markets after pouring billions of dollars into big banks on Wall Street and Europe that were reeling from losses related to the US mortgage market. The Government of Singapore Investment Corp (GIC), which analysts estimate could manage assets or more than 300 billion US dollars, said financial turmoil would leave markets extremely volatile over the next one to two years. "We could be facing a recession which is longer, deeper and wider than any recession we have encountered in the last 30 years" Deputy Chairman Tony Tan told GIC's staff on Monday. He added the world is facing a period of "extreme uncertainty". The Singapore official gave his bleak outlook at a staff meeting attended by half of GIC's 1,000 employees. Journalists were invited to the event at a convention centre, reflecting efforts by the otherwise secretive group to be more open and transparent. Stake building by state-owned funds has raised concerns in the US and Europe that foreign governments might be investing for political rather than financial gain and may one day use the stakes to advance national interests. GIC invested 11 billion US dollars on UBS convertible bonds last December after the Swiss bank sought to shore up its capital following losses from the US subprime mortgage market. In January, it invested 7 billion in Citigroup. Stocks in both banks have slid this year. "We regard our investments in UBS and Citigroup as long-term investments which will give us good returns when markets stabilize and economic conditions return to more normal levels," Tan said.