Current economic indicators
JAYAN JOSE THOMAS
ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2008 — Sustaining Growth and Sharing Prosperity: Pub. by Academic Foundation for and on behalf of the United Nations, 4772/73, 23 Bharat Ram Road (23 Ansari Road) Daryaganj, New Delhi-110002. Rs. 795.
This work is a United Nations report celebrating its 60th year of publication in 2008. The report covers member countries of the Economic and Social Commission for Asia and the Pacific (ESCAP), which include the developed economies of Japan and Australia, fast-growing economies of China, India and Russia, as well as a number of tiny Pacific Island economies such as Palau and Papua New Guinea.
The report predicts that developing countries in the Asia-Pacific region will record a healthy rate of economic growth of 7.7 per cent in 2008, which, however, would be lower than the corresponding growth rate of these countries in 2007. The continuing fast growth of China and India provides much momentum to the region’s economy. Commodity- and energy-exporting countries, particularly the Russian Federation, have been the beneficiaries of high commodity prices. As in the rest of the world, the tremors of the economic crisis in the U.S. have been felt in the Asia-Pacific region too. Inflation, especially of food articles, is a key area of concern for countries in the region.
Reasons for optimism
The unfolding economic crisis in the U.S. and Europe will depress demand for the region’s exports. There is also the possibility of sudden capital outflows from some of the countries in the Asia-Pacific region. However, despite such challenges, there are reasons for optimism.
In general, macroeconomic fundamentals of countries in the region show healthy trends with relatively low budget and current account deficits and large foreign currency reserves. Strong domestic demand especially from large countries such as China and India is another factor that fuels economic growth. Exports of services have emerged as an area offering high potential benefits for a number of countries in the region. The report points out that trade in services has grown spectacularly in India in recent years: the average annual rate of growth was 29 per cent between 2000 and 2006.
Widening inequalities
The problem of widening inequalities in the Asia-Pacific region is discussed in the report. The Gini coefficient measure of inequality has increased over the past 10 years in 15 out of 21 countries of the region for which estimates have been made. The report notes that China’s economic growth during the period 1981-2001 was only weakly pro-poor. With respect to achieving pro-poor economic growth over the past two decades, India’s record has been better than China’s, according to the report.
The report devotes one of its three chapters to agriculture. Fast growth of agriculture is crucial to reducing poverty in the Asia-Pacific region as the agricultural sector employs 60 per cent of the working population in this region. The report estimates that if the average agricultural labour productivity in the Asia-Pacific region can be raised to the agricultural labour productivity level in Thailand, the poor in the region would be reduced by 218 million. Other recommendations for greater agricultural prosperity in the Asia-Pacific region include comprehensive liberalisation of agricultural trade, diversification into high-value crops, and growth of the non-farm sector.
Agricultural trade
The report points out that agricultural trade liberalisation would benefit net exporters of food and agricultural products such as Indonesia and Thailand. At the same time, agricultural trade liberalisation would be harmful to the interests of the poor in countries such as Bangladesh and the Philippines, which are net importers of food. The report recommends comprehensive agricultural liberalisation — as opposed to reforms under the Doha Round of negotiations — for greater poverty reduction and improved welfare effects. However, as the report further shows, the biggest gainers from comprehensive agricultural liberalisation will be the developed countries.
The report identifies international migration and climate change as two major medium-term challenges facing the Asia Pacific region. Ensuring safe working conditions for migrant workers and reducing the social and psychological costs to the migrants’ families left behind are important concerns. Promoting “green growth”, adopting carbon neutral products and services, expanding carbon trading, encouraging technology transfer between developing countries, reversing deforestation, and implementing waste management measures are some of the necessary steps to manage climate change.
There is no doubt that this report, which also has a useful statistical appendix of economic and social indicators for Asia Pacific countries, will greatly contribute to our understanding of contemporary world economy.
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