Singapore's GIC sees recovery continuing next year

SINGAPORE, Nov 14 (Reuters) - Sovereign wealth fund the Government of Singapore Investment Corp [GIC.UL] expects the global economic recovery to extend into 2010 with stronger growth in Asian and Latin American countries that have lower debt levels, Deputy Chairman Tony Tan said on Saturday.

"In the short term, the bounce could surprise on the upside," Tan said at a conference for APEC business leaders.

Tan said the risk in the medium term was that economies could stagnate while inflation was a longer-term threat.

"Over the next one to three years, weak growth and excess capacity will be strongly disinflationary. However, beyond that, over the next 5-10 years, policy errors or political pressure could lead central banks to accommodate higher inflation."

GIC, estimated to be the world's fourth largest wealth fund with assets in excess of $200 billion, has been putting more money in alternative investments such as real estate and infrastructure to diversify its portfolio.

The fund is sitting on a large cash pile, holding about 8 percent of its portfolio in cash as of end-March 2009. [ID:nSIN485515]

GIC was one of the first sovereign wealth funds to pump billions into Western banks rocked by the financial crisis. The fund said in September its investment in UBS (UBSN.VX) was still showing a loss but it was in the money for Citigroup (C.N) and had already realised a $1.6 billion profit from halving its stake in the U.S. lender.

For a factbox on GIC, please click [ID:nSIN485514]. (Reporting by Kevin Lim and Saeed Azhar; Editing by Neil Chatterjee)