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Crisis behind them, Asian countries should refocus on poverty: ADB |
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April 27, 2000 BANGKOK, APR 26 (AP) - With their economies climbing out of the crisis that rocked the region three years ago, Asian countries need to work harder to lift 900 million people living on less than 1 dollar a day out of poverty, the Asian Development Bank said Wednesday.
But the region's "impressive" success in putting the worst recession in a generation behind it has bred complacency sapping the will to put painful but still necessary reforms into effect, the bank said in an annual regional survey, Asian Development Outlook 2000.
Despite pressure from international financial institutions that bailed out some of the worst-hit countries, restructuring in corporate and financial sectors has slowed and some countries are backsliding, the Manila-based bank said in the report, released in Bangkok.
Myoung-Ho Shin, vice president for the bank's western region, told a news conference Asia would stay the world's fastest-growing region - and predicted 6.2 percent average growth this year - many traps lay on the path to further recovery. Among them: - The rollicking U.S. economy, a main destination for exports of electronics goods that boosted Asia's recovery last year, could suffer a "pronounced slowdown due to the persistence of its current-account deficit or a large correction in equity prices," Shin said.
- Large fiscal deficits racked up by countries to stimulate their economies out of the crisis could become unsustainable.
- The unfinished agenda in corporate and financial sector restructuring risks staying unfinished without the crisis-fueled sense of urgency to see it through. Banking sectors in many countries remain burden with huge levels of problem loans.
But the biggest challenge is spreading the benefits of recovery to hundreds of millions of people who remain in poverty, Shin said.
"According to a commonly used definition of poverty - those who live on less that 1 dollar a day - about 900 million people were poor in 1998," Shin said. "This is about twice as many poor people as in the rest of the developing world combined."
Quality of life in Asia suffers from more than lack of money. Shin cited illiteracy, malnutrition, poor health, limited access to water and sanitation, vulnerability to economic shocks and a lack of political freedom.
"Nearly half the population in South Asia is illiterate," Shin said. "In several countries in Indochina, fewer than half of households have access to clean drinking water. Every year, 2.7 million people die of diseases related to air pollution in Asia."
Economic growth has the potential to lift more people out of poverty than anything else, the bank said. But failure to implement reforms like transparency, good corporate and political governance and opening market access threaten to stop Asia reaching its economic potential.
If Asia can continue historical growth trends, Shin said, a bank study indicates that poverty could be eradicated by 2025.
The global trading environment needs to be improved, Shin said. The United States and Europe still maintain high barriers in agriculture and textiles, two sectors where poor countries have a competitive advantage.
Anti-dumping measures and complaints about labor and environmental standards strike poor countries as a cover for protectionism, Shin said.
While the bank is generally optimistic about growth over the next two years, the report said Asia's corporate and financial sectors remain riddled with "substantial problems" and success is not assured.
A number of interests, such as big business, labor unions and politicians, are trying to hamper reforms, according to the report.
Asia's worst-hit large economies - South Korea, Indonesia, Thailand, Malaysia and the Philippines - must speed up disposing of bad bank loans and developing fledgling capital markets, the report concluded.
Growth in developing Asia, which excludes Japan, Australia and New Zealand, is forecast at 6.2 percent this year, a more bullish projection than the 5.5 percent the bank made late last year.
Growth in Southeast Asia in 2000 is forecast at 4.6 percent after 3.2 percent last year. Growth in Asia's industrialized economies - South Korea, Taiwan, Hong Kong and Singapore - is projected at 6.5 percent in 2000 after 7 percent in 1999.
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