SE Asian poverty levels set to double: World Bank

SE Asian poverty levels set to double: World Bank

BANGKOK (AFP): Poverty is set to more than double in crisis- hit Southeast Asian countries as income distribution worsens amid the regional financial crisis, a World Bank expert said on Thursday.

The numbers of people living under the poverty line in four crisis-hit countries could soar from 40 million to 90 million as a direct result of the economic turmoil which began in Thailand in mid-1997, the expert said.

"The impacts are really very dramatic," World Bank lead specialist in East Asia, Richard Newfarmer, said in a briefing for business people and academics here.

He said that under the worst case scenario, the number of people living in poverty in the Philippines, Thailand, Malaysia and Indonesia will more than double between 1997 and 2000.

That assumed an overall 10 percent reduction in output over the three-year period and a 10 percent worsening in inequality of income distribution, factors which Newfarmer said were possible.

"This underscores the importance in government policy in protecting lower income groups and ensuring that the concentration of income or worsening of income distribution doesn't in fact occur," he said.

He said that even without the expected growing inequality in income distribution, the number of people living in poverty in Thailand would rise from nine million to 13 million -- or about 23 percent of the population -- over the period.

Thailand has been one of the countries worst hit by the crisis and accepted a US$17.2 billion rescue package from the International Monetary Fund in August last year.

Newfarmer said governments throughout the region had to spend more on services for lower income earners and job creation schemes for unskilled workers.

Medium-term reforms such as pension reforms, unemployment insurance and education investment were becoming even more "urgent" as the impact of the crisis on the poor became clearer.

"In Indonesia the access to rice has become terribly important and the government has had to fight assertively to maintain distribution channels," he said.

School enrollments, meanwhile, have fallen from 78 percent to 54 percent of children in Indonesia since the crisis began.

"This would imply a ripple effect for over a generation because human capital would be lost and the potential of those children who are forced to drop out of school ... would be lost," he said.

He said the Japanese government's $30 billion stimulus fund for its troubled Asian neighbors would "go a long way toward speeding recovery in the region.

But recovery depended on a range of factors including external events in world markets such as Japan and Latin America.

"The prospect of a world recession is perhaps more likely than it was six months ago," Newfarmer said.