The current global economic crisis provides a good opportunity to address some long term issues, a high-level panel on the economic crisis agreed in discussions on 29 April 2009 in Bangkok.
 
The panel was part of the Economic and Social Commission for Asia and the Pacific (ESCAP) annual meeting. It was moderated by Noeleen Heyzer, United Nations Under-Secretary-General and Executive Secretary of ESCAP. The speakers included her counterparts for Africa, Abdoulie Janneh, and for Europe, Jan Kubis. Also speaking was Kim Jong-hoon, Minister of Trade, Republic of Korea; Ajay Chhibber, Director for Asia and the Pacific, UN Development Programme (UNDP); and Martin Khor, Executive
Director, South Centre – an intergovernmental organization of developing countries based in Geneva.
 
“The Asia-Pacific region has shown remarkable resilience to this crisis,” said Dr. Heyzer in her opening remarks.  “This is due, in large part, to the wide ranging regulatory reforms taken by countries in our region since the 1997 economic crisis.”  However, that resilience has been eroded under the strain, noted Dr. Heyzer, and there are some critical issues the region needs to address.
 
“One is to guard against trade protectionism. An early conclusion of the Doha round and more intraregional integration would provide new impetus to economic recovery,” Dr. Heyzer said. She also called for more stable currency exchange rates in the region to prevent competitive devaluation in the face of declining exports. It is important to intensify regional coordination and policy coherence, Dr. Heyzer pointed out, so that “economic recovery evolves in line with a more sustainable and inclusive process of economic growth.”
 
No region in the world is immune to the crisis, Mr. Kubis, Executive Secretary of the Economic Commission for Europe, pointed out. “For the European region, extreme poverty had almost been eliminated by the end of 2007,” he said. “But with higher food prices, falling employment opportunities, reduced remittances and strained safety nets, it is estimated that another 10 million people in the region have been pushed back into poverty.”    
 
Mr. Janneh of the Economic Commission for Africa noted that the widely held view that Africa, because of its lack of integration into global finance, would shield itself from the crisis had turned out to be optimistic. “We are now experiencing a slowdown in growth, declining exports, reduced tourism, investment flows, remittances and weakening currencies”
 
A major source of financial instability is the world’s dependency on the currency of a single country – the United States – as international reserve currency, according to Martin Khor of the South Centre. “This causes instability as availability of reserves for the world economy depends on the United States having growing current account deficits.”  He called for an alternative reserve system based on the Special Drawing Rights of the International Monetary Fund (IMF).    
 
Mr. Kim in his remarks cautioned against sneaking in “grey” protectionist measures with economic stimulus packages. Such policies are short-sighted as they fail to consider the possible reactions of trading partners and may escalate into a vicious cycle of counter protectionist measures. “What we need is a New Green Deal,” said Mr. Kim. Investing in new green technologies will create high pay jobs while new green public works projects will increase demand for labour. Both will improve the
environment.  
 
Another long-term investment Asia-Pacific governments should make using their stimulus packages is creating social protection measures, according to Mr. Chhibber of UNDP.
 
“Asian savings rates are extraordinarily high,” Mr. Chhibber observed, “because the precautionary motive is so strong.” With little access to public health care and unemployment benefits, people resort to savings to protect themselves. “That is all money that does not go back into the economy,” he noted.
 
“The present crisis has provided us all with an important window of opportunity for addressing longer term issues,” Dr. Heyzer said, summarizing the panel’s discussions. “The challenge ahead is to lay the economic and social foundations for a more inclusive development model that is based upon environmentally sound principals.”

While most governments are focused on dealing with the worst economic crisis in many decades, two other longer term crises should not be forgotten. Food-fuel price volatility and climate change are converging with the present economic crisis to create what is now being referred to as the triple threat. With almost two thirds of the world’s poor and half of its natural disasters, Asia and the Pacific is at the epicentre of the triple crises.

This message comes from the Economic and Social Survey of Asia and the Pacific 2009, the flagship publication of the United Nations’ regional arm – the Economic and Social Commission for Asia and the Pacific (ESCAP). Entitled "Addressing Triple Threats to Development,” the report was released today, 26 March 2009, in over 20 cities across the region and in New York and Geneva.

The Survey provides a regional perspective as well as country-specific analyses, and outlines ways in which economies in the region can move forward in unison towards a more inclusive and sustainable development path.

“The severity of the triple crises required a more responsive, action-oriented agenda,” said Noeleen Heyzer, UN Under-Secretary-General and Executive Secretary of ESCAP at the main launch in Bangkok.  “The Survey’s findings and recommendations will serve as a guide to policymakers through the uncertain times ahead.”

Resilience to financial crisis eroded by reliance on exports to other regions 

This is the second time in a decade Asia and the Pacific has been hit by a financial crisis. However, the Survey finds that reforms undertaken since 1997 - implementation of prudent macroeconomic policies, improved fiscal balances, banking reforms and foreign exchange reserve accumulation –  made the region more resilient at the beginning of the current crisis. That resilience started to erode, however, when in the fourth quarter of 2008, trade - the region’s engine of growth - moved from double digit growth to double digit declines. 
 
“The fact is that the Asia-Pacific region is more economically integrated with the rest of the world then with itself,” Dr. Heyzer noted. “Intraregional trade among developing countries accounts for only 37% of exports in our region, compared with NAFTA at 51% and the E.U at 68%.”

The Survey calls for more intra-regional trade and investment by accelerating implementation of regional economic cooperation agreements. “By strengthening our domestic markets, the region can provide a buffer to global market fluctuations and move from being crisis resilient to crisis resistant. A key component in this will be how governments use fiscal policy as a tool of development” Dr. Heyzer added.

Poverty and food/fuel crisis increase vulnerability to climate change

The Survey points out that the triple crises are interlinked and are reinforcing the impacts of each other. It notes that the number of the poor in Asia and the Pacific – already two thirds of the global total – is likely to increase as a result of the economic crisis and rising unemployment. Record high oil prices last year of $147 dollars a barrel, in combination with hording and price speculation drove the price of rice up by 150 percent. This is the region’s staple, with price increases hitting the poor the hardest.

At the same time, studies have shown that natural disasters disproportionately affect the poor and the most vulnerable. Asia, as the most disaster-prone region in the world, experiences almost half of global natural disasters, with a disproportionate 65 per cent of the victims. Climate change threatens to further magnify the vulnerability of the poor by increasing the frequency and severity of natural disasters, and crop failures, in the region.

Stimulus packages offer opportunity to address long term issues

The Survey sees governments’ stimulus packages as an opportunity to not only reinvigorate the economy in the short term, but address long-term issues by investing in food and energy security, social safety nets, disaster risk reduction and green technology.
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“Impacts of the crises have hit the world’s poor the hardest, two thirds of whom live in the Asia Pacific.  It is clear that a more inclusive model for economic growth is required to address their needs,” Dr. Heyzer said. “This requires setting up social protection systems that increase income security and free up the spending power of middle and lower income people who drive the economy.”
 
The Survey points out that coverage of basic social protection is currently very low in the Asia-Pacific region, with only an estimated 30 per cent of the elderly receiving pensions and 20% of the population having access to health-care assistance.
 
“The converging triple threat highlights the need for a more comprehensive, inclusive approach to development,” Dr. Heyzer noted. “Not only is there an urgent requirement to resume economic growth, but we have to re-think where that growth takes place and whom it benefits.”

“As the Asia-Pacific region becomes more influential in discussions shaping the future global economic architecture, so too will its responsibility to address the underlying causes of the triple threats. Our region has the potential to emerge from the current crises as a global leader, but only if current stimulus packages and reforms are implemented in a manner that is both inclusive and sustainable.”

The Economic and Social Survey of Asia and the Pacific 2009 is available online.

For more information, contact UNIS Bangkok. 

The United Nations Day ceremony was organized by the United Nations Information Service (UNIS) Bangkok, the UN Country Team and the UN Association in Thailand.  Exhibits by the 20 UN entities operating in the country were shown in the largest shopping mall in Bangkok. Speaking in front of approximately 450 UN staff members, Thai government officials, members of the diplomatic corps, students and representatives of civil society, Prime Minister General Surayud Chulanont reaffirmed Thailand’s continuing support “for all the good work that the United Nations and its specialized bodies, indeed all of you, are doing for the cause of multilateralism, for the benefit of our region and the world at large."

In front of over 200 classmates and teachers, Nimisha Ebbers and Alisa Santikarn of the New International School of Thailand (NIST) proudly received their certificates for honorable mention in the Human Rights Day 2006 writing contest. The presentation ceremony took place on 8 June.