UN policy body examines lessons learnt as Asia-Pacific region recovers from global economic crisis
Asian-Pacific countries at the United Nations regional headquarters today began an in-depth look at the effects of the global financial and economic crisis on their economies, with recovery patterns, policy responses and improving regional financial and economic cooperation high on their agenda.
Noeleen Heyzer, Under-Secretary-General of the United Nations and Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP), said the latest crisis offered the region an opportunity to rebalance its economies in favour of domestic and regional consumption, and part of that effort included the establishment of social protection systems.
“People without social protection hold on to their savings and are unlikely to spend,” she said in her opening remarks to ESCAP’s Committee on Macroeconomic Policy, Poverty Reduction and Inclusive Development. “Providing minimum wage and unemployment insurance will buffer people from financial uncertainties and help drive economic recovery.”
She went on to note that it was equally important for the region to set up a comprehensive financial architecture “intermediating between emerging investment opportunities, especially in regional public goods such as improving regional connectivity on the one hand, and rising foreign exchange reserves on the other.”
Atiur Rahman, Governor of the Bangladesh Bank, said it was incorrect to blame the “supposed excessive Asian frugality” for weaker domestic demand. Rather, “the root cause behind weaker domestic demand in our region is poverty and the low income of a large part of the population,” he told the Committee. “Sustained inclusive economic growth – with advancement opportunity open to all – will be the key to the strengthening of domestic demand by reducing poverty.”
Ambassador K. Kesavapany, Director of the Institute of Southeast Asian Studies in Singapore, said the financial crisis gave an opportunity for countries to undertake a coordinated approach to dealing with it. “The degree of macroeconomic policy cooperation displayed during this crisis was really impressive,” he said, noting that forums such as the G20 were used to coordinate policies and deliver a unified message.
He also highlighted ESCAP’s role in propelling coordination among the regional agencies.
Panas Simasathein, Chairman of Thailand’s National Economic and Social Development Board (NESDB), shared his country’s three-pronged approach to reducing poverty. He noted the concept of a “sufficiency economy” advocated by His Majesty the King, a pro-poor macroeconomic environment and enabling factors which help the poor to improve their business and engage in the market, all of which enabled Thailand to reduce its poverty levels to below 10 per cent of the population within 20 years. Thailand, he said, was now in a “relatively better situation to cope with the social impact of current economic crisis than in the previous one.”
Yilmaz Akyuz, senior advisor at the South Centre in Geneva, said the link between consumption and income inequality was missing from most analyses of economic development in the region. He added that regional instability in Asia and the Pacific was due to incompatible and inconsistent exchange rate regimes, which did not provide a sound basis for deeper regional integration.
Mohammed Ariff, Executive Director of the Malaysian Institute of Economic Research, stressed that rebalancing the global economic equation required parallel action in the form of reduced consumption and increased savings from the United States, and greater consumption and less savings by Asia.
During the Committee’s three-day session, representatives from across Asia and the Pacific are expected to also look at the effect of the economic crisis on achieving the Millennium Development Goals (MDGs); programmes to assist least developed countries (LDCs); and progress towards strengthening the Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific (CAPSA), an ESCAP subsidiary body based in Bogor, Indonesia.