A United Nations report has called upon governments in the Asia-Pacific region to increase social spending to consolidate the region's stronger than anticipated economic rebound and to spur over the long term a fairer, more balanced, and sustained economic recovery.
The Economic and Social Survey of Asia and the Pacific 2010, an annual publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released globally on Thursday provides the governments of the region — representing 62 per cent of the world's population — a roadmap towards a more inclusive and sustainable development path.
According to the survey, even at the height of this crisis, Asia-Pacific was still the fastest-growing region, supported in large part by fiscal stimulus packages adopted by the region's biggest economies.
The report finds the outlook for 2010 has improved significantly, with the region's developing economies forecast to grow by 7 per cent, led by China (9.5) and India (8.3).
However, rising inflationary pressures, especially of food products, and asset price bubbles, in a number of countries make 2010 a complex year for policy makers who will have to balance the momentum of growth with financial stability. While monetary tightening may be necessary to restrain inflationary pressures, policy makers must be cautious about withdrawing fiscal stimulus packages lest the fledgling recovery process is disrupted, it said.
It also recommends the use of capital controls to moderate short-term capital inflows — the result of a massive expansion of liquidity in western countries —which has created asset bubbles, inflationary pressures and exchange rate increases in the region's developing economies.
A sustained, long term development for all economies within the region will have to rely on creating new engines of growth, with greater regional consumption through increased intra-regional trade, and accelerating the development of an Asia-Pacific consumer market.
Increased social spending directly supports income security for households by providing food security, education and access to health care, reducing the need by poorer families to maintain precautionary savings to protect against adversity. These families are then able to contribute more to local economies and invest more in their own development, it suggests.
Also, as the majority of the region's poor lives in rural areas deriving benefit from agricultural growth, the survey recommends continued support for crop and rural development, urging a new, knowledge-intensive Green Revolution to make agriculture more environmentally resilient. Countries can also increase the development value of the agricultural sector by making it more socially inclusive: returning ownership of land and resources to farmers, especially women, and economically empowering the poor.