UN asks Asia Pacific to shun ‘stabilisation policies’
Targeted at lower deficit and inflation, these policies restrict development as well.
Targeted at lower deficit and inflation, these policies restrict development as well. DESIGN: ANAM HALEEM
ISLAMABAD:
In its latest report on the state of economies in the Asia Pacific, the United Nations has asked regional governments to bid adieu to stabilisation policies that target low budget deficits and lower inflation but lead to less development as well.
The Economic and Social Survey of Asia and the Pacific, launched simultaneously at 37 locations on Thursday, lays emphasis on a forward-looking approach to tackle challenges of the 21st century. It urges Asia-Pacific countries to break from the past when the focus was on stabilisation of economies.
The report lays a pathway towards inclusive and environment-friendly growth as the key to creating new sources of economic vitality amidst ongoing global uncertainty, said Dr Ashfaque Hasan Khan, Dean of National University of Science and Technology Business School, who presented the survey at the launching ceremony.
The report states that so far macroeconomic policies have remained focused on managing public finances and controlling inflation. The policies should be forward-looking with focus on sustainable but inclusive development.
Greater emphasis should be on quality expenditures on health, education and physical infrastructure. Small and medium enterprises should also have access to finances.
Khan said balancing of macroeconomic policies meant that resources should be invested in human and physical infrastructure to create more jobs as stabilisation policies caused growth in joblessness.
The survey projects 6% growth in Asia Pacific for the current year, which is slightly higher than last year’s rate, yet lower than pre-crisis growth momentum.
The Asia-Pacific region has so far lost $870 billion in output when compared with the pre-crisis growth rate and these losses are expected to increase to $1.3 trillion in the next four years. About 800 million people are still living below the poverty line while one billion people are vulnerable.
The report projects 3.5% growth for Pakistan, which is lower than official estimates, but in line with projections made by other international financial institutions. Persistence of high inflation is a challenge for the country, primarily due to entrenched expectation of inflation remaining high.
The report states that key drivers for this expectation are continued fiscal borrowings from the central bank and feared depreciation in the exchange rate, even though the external current account deficit is modest.
The report states that keeping in mind the changing environment, China is also reprioritising its policies and shifting to consumption-led growth by moving away from export-led growth.
The export-led growth has strained Beijing’s relations with Washington. There have been strong views in the US that Chinese cheap goods and labour are adversely affecting US companies, thus China should reprioritise its policies.
According to the proposed inclusive development model, there will be job guarantee for all for at least 100 days a year. Universal non-contributory pensions for all over the age of 60 will be implemented besides energy access to all by 2030.
The report proposes that countries can finance this by broadening their tax base and reducing non-development expenditures without considerably stretching their budgets.
The report also highlights the challenges faced by the region. Major challenges are uncertain global environment due to slow recovery in the US and extended recession in the European Union. Regional slowdown in context of China and India will have adverse implications for the whole region as China is the biggest market for other countries’ goods.
Economic insecurity has curtailed job growth and youth unemployment rate in Pakistan is 11%. There is also growing inequality.
It suggests that in order to realise its development potential, countries in South Asia in general will have to overcome a number of development challenges. These challenges are large concentrations of poverty and hunger, rising inequality, poor levels of human development, wide infrastructure gaps, lack of a diversified base for high value-added products and exports coupled with widespread food and energy insecurity and high risk of disasters.
Published in The Express Tribune, April 19th, 2013.
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In its latest report on the state of economies in the Asia Pacific, the United Nations has asked regional governments to bid adieu to stabilisation policies that target low budget deficits and lower inflation but lead to less development as well.
The Economic and Social Survey of Asia and the Pacific, launched simultaneously at 37 locations on Thursday, lays emphasis on a forward-looking approach to tackle challenges of the 21st century. It urges Asia-Pacific countries to break from the past when the focus was on stabilisation of economies.
The report lays a pathway towards inclusive and environment-friendly growth as the key to creating new sources of economic vitality amidst ongoing global uncertainty, said Dr Ashfaque Hasan Khan, Dean of National University of Science and Technology Business School, who presented the survey at the launching ceremony.
The report states that so far macroeconomic policies have remained focused on managing public finances and controlling inflation. The policies should be forward-looking with focus on sustainable but inclusive development.
Greater emphasis should be on quality expenditures on health, education and physical infrastructure. Small and medium enterprises should also have access to finances.
Khan said balancing of macroeconomic policies meant that resources should be invested in human and physical infrastructure to create more jobs as stabilisation policies caused growth in joblessness.
The survey projects 6% growth in Asia Pacific for the current year, which is slightly higher than last year’s rate, yet lower than pre-crisis growth momentum.
The Asia-Pacific region has so far lost $870 billion in output when compared with the pre-crisis growth rate and these losses are expected to increase to $1.3 trillion in the next four years. About 800 million people are still living below the poverty line while one billion people are vulnerable.
The report projects 3.5% growth for Pakistan, which is lower than official estimates, but in line with projections made by other international financial institutions. Persistence of high inflation is a challenge for the country, primarily due to entrenched expectation of inflation remaining high.
The report states that key drivers for this expectation are continued fiscal borrowings from the central bank and feared depreciation in the exchange rate, even though the external current account deficit is modest.
The report states that keeping in mind the changing environment, China is also reprioritising its policies and shifting to consumption-led growth by moving away from export-led growth.
The export-led growth has strained Beijing’s relations with Washington. There have been strong views in the US that Chinese cheap goods and labour are adversely affecting US companies, thus China should reprioritise its policies.
According to the proposed inclusive development model, there will be job guarantee for all for at least 100 days a year. Universal non-contributory pensions for all over the age of 60 will be implemented besides energy access to all by 2030.
The report proposes that countries can finance this by broadening their tax base and reducing non-development expenditures without considerably stretching their budgets.
The report also highlights the challenges faced by the region. Major challenges are uncertain global environment due to slow recovery in the US and extended recession in the European Union. Regional slowdown in context of China and India will have adverse implications for the whole region as China is the biggest market for other countries’ goods.
Economic insecurity has curtailed job growth and youth unemployment rate in Pakistan is 11%. There is also growing inequality.
It suggests that in order to realise its development potential, countries in South Asia in general will have to overcome a number of development challenges. These challenges are large concentrations of poverty and hunger, rising inequality, poor levels of human development, wide infrastructure gaps, lack of a diversified base for high value-added products and exports coupled with widespread food and energy insecurity and high risk of disasters.
Published in The Express Tribune, April 19th, 2013.
Like Business on Facebook to stay informed and join in the conversation.