WHILE monitoring global economic conditions, it is also perhaps worthwhile pondering over the medium- to long-term prospects of the national economy in anticipation of the eventual recovery of the global economy.

A review of past growth rates would suggest (though roughly) that our national economic growth performance has been lacklustre since the 1997 Asian financial crisis, compared with the high growth rate era prior to 1997.

Growth in excess of a seven per cent benchmark rate was achieved only in 2000 when the economy recorded an 8.9 per cent expansion, unlike the period 1988-96 when the annual growth rate never fell below 7.8 per cent.

Economic growth has also become more volatile, reflecting the higher degree of uncertainty that the national economy has to contend with. The annual growth rate ranged narrowly between 7.8 per cent and 10 per cent in 1988-96 as opposed to a significantly wider range of between 0.3 per cent and 8.9 per cent in 1999-2007.

At least two recent developments in the international economic arena could arouse concerns about the medium- to long-term growth prospects of the national economy.
First, the earlier oil price increase, owing largely to speculative forces, which only saw a reversal in tandem with the gloomy outlook of the global economy, implies that any future sign of economic recovery could trigger a sharp rebound in oil prices. This could then be growth-retarding.

Second, while the current financial turmoil is attributable to derivatives trading and over-leveraging in the West, it is also plausible that many developing countries would not have enjoyed rapid growth in the absence of such practices.

The consumption binge in the United States could have directly or indirectly provided the wherewithal to growth for many countries and raised their living standards. Hence, any move to check such practices, including reforms made to the international financial architecture, though desirable, could mean that econo-mies can only grow at a slower pace. The world may then be placed on a stable but lower growth path.

All this may call for a review of our national development strategies. The management of the nation in a low-growth era could be more challenging, especially with rising expectations of the people.

Meanwhile, apart from liberalising the services sector, lowering the cost of business operations, human-resource development and enhancing the public sector delivery system, no effort should be spared in improving the public transport system, given that low oil prices and the adverse global economic condition are only temporary phenomena.

This is to ensure that the public will have recourse to a reliable and efficient public transport system when oil prices start skyrocketing again. Continued attention must be given to domestic food production as a matter of national food security, even though the global food shortage has eased. Social safety nets should be cast to ease the misery of those laid off in the event of a cyclical downturn.

With respect to the current global economic upheavals, one could at least for now take comfort in being spared the double whammy of stagflation, a scenario that seemed probable earlier when oil prices were escalating. The macro economic and other policy initiatives undertaken by national governments could potentially minimise the severity and duration of the current crisis.