WHEN Dr Tony Tan, executive director of Singapore's biggest sovereign wealth fund, warned in July the world might plunge into its worst recession in 30 years, many shrugged off his remarks as too gloomy.

Three months later, Dr Tan's prophecy of doom is becoming a reality as the credit crisis ravages US and European banks and takes a growing toll on the global economy.

Dr Tan's Government of Singapore Investment Corporation (GIC) is meanwhile sitting with 7 per cent of its estimated US$300 billion (S$434 billion) portfolio in cash and another 26 per cent in G7 government bonds.