Global crisis to keep over 60 million Asians in poverty

HANOI (AFP): The global economic crisis will keep more than 60 million Asians in poverty this year, the head of the Asian Development Bank said on Monday, urging a greater focus on social welfare including healthcare. “This crisis should be seen as an opportunity to take proactive measures that lay the groundwork for inclusive and sustainable development over the long term,” Haruhiko Kuroda, the Bank’s president, told an international conference.

Soaring food costs, rising oil prices and, over the past year, the global economic crisis have cost 41 million Chinese workers their jobs while the number of chronically hungry in South Asia has increased by about 100 million, Kuroda said.

Asian Development Bank (ADB) estimates show 60 million people are stuck below the $1.25-a-day poverty line because of the financial crisis.

“These people would have been freed from the shackles of poverty had economic growth continued at pre-crisis levels,” Kuroda told the opening session of the meeting, billed as the first major Asia-Pacific conference on the social impact of the crisis.

The ADB, whose aim is to reduce regional poverty, said Asia’s poor have been especially hard hit partly because social safety nets to cushion the impact of the economic slowdown have been inadequate.

While signs of worldwide economic stabilization are emerging, the longer-term challenge for Asia’s developing economies will be to enhance resilience to external shocks, Kuroda said.

“Practical steps include fostering intra-regional trade, managing financial globalization, maximizing the benefits of labor mobility, and investing more in education, health, and social protection,” he said.

Many governments have implemented multibillion-dollar stimulus measures to deal with the crisis but these have focused more on infrastructure and tax cuts than social services, says a paper prepared for the conference.

The three-day event is being organized by the ADB, the Vietnamese and Chinese governments and the secretariat of the Association of Southeast Asian Nations (ASEAN).

Citing China’s expansion of basic health insurance for the poor, Kuroda said such measures reduced the need for “precautionary savings” by the poor and increased money for consumption or more productive savings, which benefits the economy.

Kuroda also referred to Indonesia where, after reducing fuel subsidies, the government in 2007 began paying poor families if they met certain health and education requirements, such as ensuring their children attended school.

The program is expected to reach 6.5 million families and could serve as the basis of a future social security system, he said.

Almost all countries face a “daunting challenge” from the scale of the current crisis, which mainly affected urban educated youth earning around two dollars a day, the paper said.

“Women in export industries who gained a lot from the globalization of the last decade are now the first losing their jobs,” it said.

Rather than having a direct impact on the poor in rural areas, the crisis in particular made urban low-income groups vulnerable to poverty, the paper said.

Many of the poor urban unemployed moved into overcrowded slums, further degrading the environment and adding pressure on weak infrastructure in the cities, the paper said.

The conference, which ends Wednesday, has drawn hundreds of development workers, officials and academics.