South Asian states asked to reshape policies

It will help cope with external shocks, result in inclusive growth

LAHORE:

Saarc Chamber of Commerce and Industry President Iftikhar Ali Malik has urged the South Asian countries to carefully reshape their monetary and fiscal policies to counter external shocks and protect the vulnerable, while laying the foundation of green, resilient and inclusive growth in the wake of Russia-Ukraine conflict.

Talking to a delegation of women entrepreneurs, Malik said that the conflict would gradually push down the growth of fragile South Asian countries due to the persistent economic challenges as they were already grappling with the rising commodity prices, supply bottlenecks and vulnerabilities in the financial sector.

He feared that the conflict would put the world on the brink of food crisis and millions at risk of starvation. “Rising fuel prices have sparked a frantic search for alternative energy and those crops which are increasingly attractive, besides skyrocketing food prices, will ignite protests and unrest.”

Furthermore, the war would amplify the challenges including increase in inflation, fiscal deficit and deterioration in the current account balance, he said.

South Asia has confronted multiple shocks in the last couple of years including the effects of the pandemic while higher oil and food prices will have a negative impact on the real income of people.

On the current situation of Saarc member economies, Malik said one of the major challenges for Pakistan was its energy subsidies, the highest in the region.

In India, the household consumption would be constrained by the incomplete recovery from the labour and inflationary challenges, he said. Similarly, the Maldives will face vulnerability due to its large imports of fossil fuels and the drop in arrival of tourists from the two countries engaged in the conflict.

Likewise, the economic outlook of Sri Lanka is highly uncertain owing to the fiscal and external imbalances. He said higher food prices in Afghanistan would exacerbate food insecurity, while Bangladesh’s exports would decline significantly.

Published in The Express Tribune, June 21^st, 2022.

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