NEW YORK—The head of Government of Singapore Investment Corp., one of the world's most active sovereign-wealth funds, said Americans are being too hard on themselves and have failed to recognize the resilience of the U.S. economy.
In an interview with The Wall Street Journal, GIC Executive Director Tony Tan Keng Yam said negative sentiment is a "problem when I talk to Americans. They don't see the potential in their own economy, which is one of the most innovative, open economies in the world. Foreigners seem more optimistic."
Dr. Tan, trained as a physicist and mathematician, said he expected that the U.S. economy would grow "above trend" at a rate of between 4% and 4.5%. That would outpace the 3.3% forecast for 2011 by economists surveyed by The Wall Street Journal.
GIC has invested more than $100 billion of government reserves into a portfolio of stocks, commodities, bonds and private-equity stakes. More than one-third of the sovereign-wealth fund's total holdings are in the U.S., Dr. Tan said, adding that GIC would continue to invest here.
The 71-year-old Dr. Tan, historically averse to media interviews, said he wasn't worried about U.S. inflation, praising the monetary policy led by Federal Reserve Chairman Ben S. Bernanke as "necessary for America and the world."
"In America, the risk of inflation is very low because of the slack in the economy," he said. But the world's largest economy still faces big challenges. More important in the long run is a rebuilding of the U.S. physical infrastructure and secondary education, a lot of which is "deteriorating," according to Dr. Tan.
Meanwhile, "if oil spikes above $100, I expect a severe deflationary impact on the U.S. economy and world economy," he said. And inflation in Asian economies remains a "great concern."
"Rising asset prices for properties will be a major problem," he said in the interview. "Compounded by high oil and commodity prices, it's a major worry. I see Asia growing but with problems in asset pricing and inflation. The challenge is to engineer a soft landing."
