A 3 per cent drop in GDP may mean that an extra 10 million people would be undernourished and around 56,000 more children aged under five would die. -- PHOTO: AP
SEOUL - THE global economic crisis is also a social crisis in Asia, with an estimated 60 million people remaining mired in poverty due to falling growth rates, an Asian Development Bank executive said on Thursday.
'The social consequences of the economic crisis are very severe,' Mr Rajat M. Nag, ADB managing director-general, said in an interview. 'That is our biggest concern.'
IN EARLIER comments to the economic forum, the ADB executive expanded on what he called the most worrying aspect of the economic crisis.
'There are two faces of Asia: one shining, which has done very well... and the other 900 million people who live below one dollar and 25 cents a day and that face is not shining at all,' Mr Nag said.
Mr Nag said the estimated three per cent drop in GDP between 2008-9 in developing Asia - excluding Japan, Australia and New Zealand - meant 60 million would fail to emerge from poverty. An extra 10 million people would be undernourished and around 56,000 more children aged under five would die.
He made his comments on the sidelines of the World Economic Forum on East Asia, where speakers agreed the region must rebalance its export-led growth model to cope with shrinking Western markets.
Developing Asia at present exports 60 per cent of its production to Japan, the Euro zone and the United States and 'that cannot continue forever'. Asia must boost consumption - an important part of poverty reduction - by saving less and spending more, he said.
He said the regional savings rate was very high, largely to compensate for the lack of welfare programmes.
At present, Mr Nag said, services in Asia are difficult to access because of protectionist or other measures. 'The development model for the last 50 years of export-oriented growth which has served Asia well, which we believe was the right one, now needs to be rethought.'
Mr Nag also called for greater Asian integration on environmental and infrastructure matters. 'The centre of gravity of economic power is shifting to Asia... Asia needs to cooperate and integrate within itself,' he said.
Average growth in developing Asia was 6.3 per cent in 2008 and the ADB forecasts 3.4 per cent this year, rising to six per cent next year. But he cautioned that the biggest threat to recovery was 'to think of green shoots as more than green shoots' and slow down on reforms and stimulus measures. -- AFP
