Speaking at the G20 dinner at the World Economic Forum in Davos, Switzerland, Mr Lee added that the world economy is at a critical juncture where policy missteps could trigger a global recession.
In a meeting with leaders at the G20 dinner in Davos, Mr Lee said Asia is not immune to developments in advanced economies.
That's because they account for 60 per cent of goods and services exported from Asia, and are among the region's largest investors.
Mr Lee, who met with Head of the International Monetary Fund Christine Lagarde in Davos, said there's a need to provide the IMF with more resources to help contain the debt crisis in the eurozone and boost confidence.
Mr Lee also said that fiscal consolidation must be balanced with collective actions to spur growth and restore confidence and optimism. Another priority for G20 leaders is to support trade and guard against protectionism.
At another interview session at the World Economic Forum, Mr Lee said the momentum in China and India should carry Asia forward, if the situation in Europe does not worsen.
China, Mr Lee added, may be in for a rough landing but they will get through.
"(China) is an economy that is growing very rapidly, urbanising very rapidly. (It needs) a lot of facilities whether it is roads, hospitals, schools... Every year 1 per cent of the population move into cities, which means 30 million people need all this infrastructure," said Mr Lee.
China will see a change of guard this year and Mr Lee believes there will be continuity between the present generation of leaders and the next.
"They are of a similar mould... Very capable people, very cautious. I think there will be collective leadership, rather than any dominant single personality, which means they will act cautiously, (and) they will need some time to find their feet," said Mr Lee.
Responding to questions about US engagement in Asia, Mr Lee said their presence has generated peace and stability, which enables Asian economies to prosper.
And it's hoped that Asia will continue to remain high on their agenda.
- CNA/cc
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