Asia's poor to bear the brunt of current economic crisis

Asia's poor to bear the brunt of current economic crisis

When things go bad, the rich tighten their belts while the poor just suffer. So as Asia goes through a financial turbulence, expect the poor to bear the brunt of the economic woes. Johanna Son of Inter Press Service reports.

MANILA: Stockbrokers in suits and property tycoons are licking their wounds as Asia goes through a rough financial spell, but the poor will have to pay the highest price for the region's economic turmoil.

As Asia's currency and market malaise threatens to hurt its economic health, economists and social activists say countries should pay extra attention to the poor, who would be hard put to go through austerity measures.

While the rich and middle class have room to tighten their belts rich Thais are selling their personal jets and wealthy Filipinos have stopped buying luxury European cars the poor are in the weakest position to cope with the projected effects of Asia's economic woes. These include higher unemployment, rising prices and possible budgetary cutbacks on basic services.

"When things go bad, the poor get hurt. When things get better, the rich benefit," said Edward Van Roy, director of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) based in Bangkok.

In Manila for an ESCAP meeting, Van Roy said that while the 'trickle down' phenomenon did not work in distributing growth, it certainly applies when it comes to the poor bearing the brunt of economic troubles. "Trickle down works very well in a downturn, but not in an upturn," he explained.

If the currency problems do develop into a prolonged downturn, Asia's already difficult efforts to free its 1.3 billion absolute poor from poverty would become even more of a challenge.

While Asia has drastically cut its ranks of the poor in the last three decades, it still has three quarters, or 1.3 billion, of the world's poor. Half of these are in South Asia and nearly 400 million are poor rural women.

Asia's economic woes also show up the lack of safety nets that governments, lulled into a degree of complacency during their decades of rapid growth and lavish spending, have put in for its marginalised sectors.

"I think that now, our negligence is catching up with us," Leonor Briones of Social Watch Asia said in an interview. She says Asian governments must realize that it is not wise to focus on rapid growth without making a "deliberate" effort to chip away at poverty.

"By and large safety nets have not been established," Van Roy explained, adding that many governments have not given enough priority to poverty and often think that growth in itself automatically addresses poverty.

This weakness has been exposed in the months since July, when the devaluation of the Thai baht triggered currency turmoil that spread to Southeast Asia. The contagion spread to Hong Kong in late October, triggering panic reactions in markets in North America, Europe and Latin America.

In the wake of the crisis, governments across the region from Thailand to Malaysia are reducing growth projections for the next few years. The Asian Development Bank expects Southeast Asia's GDP growth to range only from 4.9 to 5.7 percent this year, down from the original projection of 7 percent for the year.

And while just about everybody talks about huge market crashes and crises in confidence shattering Asia's economic record, not too many are talking about the human cost of market turmoil. "Everybody is aware of the financial crisis and the possible economic crisis. What we are not so well aware of is the social implications," Van Roy said.

Philippine President Fidel Ramos, in his keynote address at a ministerial conference on social development, said the crisis hangs like a shadow threatening Asia's robust economies and said there was no magic formula to fight poverty.

Ministers from 28 countries in the Asia-Pacific expressed worry over the vulnerability of many economies in the region to widening trade deficits, mounting foreign debt repayments and economic slowdown.

And amid fears that the crisis could undercut resources for the poor and marginalised, the ministers set intermediate goals their countries are to achieve by year 2000.

These are the reduction of absolute poverty to half the 1990 level, halving infant mortality, provision of basic education for at least 80 percent of the population, and provision of secondary education for at least 80 percent by year 2000.

The ministers also pledged to devote higher priority to basis social programs in national budgets, and design programs targeted towards the "hard-core poor".

"It is necessary to monitor the impact of the crisis on the population at large and ensure that social development targets and goals are not adversely affected by the corrective measures being undertaken or planned," ESCAP executive secretary Adrianus Mooy pointed out.

The ministers likewise agreed that Asia-Pacific countries need to do more to internalize the principle that social dimensions of development are as important as growth figures. At a time when some of Asia's best-performing economies feel the financial crunch, they have to make a conscious decision to defend social priorities.

As Philippine Social Welfare Secretary said: "For too long, social development has come in second to economic priorities. But this is now changing."

Still, there is room for improvement even among ESCAP's own members. Out of 60 member-countries, only 28 were represented at the Manila conference, indicating that some governments did not deem it worthwhile to send delegates.

"Governments often attend economic meetings, but they think, social issues, why spend the money?" said Van Roy.

-- IPS