As the developed economies grapple with the worst economic downturn since the 1930s, two reports by the United Nations place the difficulties in perspective and offer valuable suggestions for both developed and developing nations to see them through the crisis in the near- to medium-term. Developed nations are yet to come to terms with the crisis in any meaningful way. Moreover, emerging economies and those from the developing world — particularly China and India — which acted as a bulwark against the spread of the economic contagion are likely to continue to play the role. But there are some caveats. The World Economic Situation and Prospect 2011 , in its global outlook, points out that, although the weaknesses of the developed world were offset by the growth in the emerging economies, two main challenges remain. These include the dangers posed by premature fiscal consolidation in the developing world and the valid concerns over the ability of the emerging world to sustain its performance, particularly given its dependence on developed markets. For the developed economies, which could risk sliding into a possible double-dip if they continue with their present monetary and fiscal policies, the answer lies in coordinated fiscal stimuli in the short-run, rather than early fiscal consolidation.
For the developing world, the U.N.'s Economic and Social Commission for Asia and the Pacific makes it evident that maintaining the region's recent growth trajectory calls for prudent policy-making, factoring in its dependence on markets in the developed world. Its year-end update of the Economic and Social Survey 2010 sounds a note of caution that there could be a slowdown in the growth of both developed and developing economies. The region's export-dependent economies particularly are likely to be affected in 2011. That said, the observation that the Asia Pacific region would see “the most dynamic growth” in the world, despite the likely dip, gives national policymakers space to come up with well-structured policies that address a pressing social concern: poverty. Of direct relevance to the region's economic and social needs are suggestions to intensify regional economic activity and close infrastructure gaps. Stubborn poverty remains the biggest challenge for the Asia-Pacific, which is home to about 947 million people living under $1.25 a day. It is necessary for developing countries to put in place inclusive development policies, supported by fiscal measures, to ensure that more people are pulled out of poverty. This, in turn, would step up aggregate demand and help the region come through the testing economic times.
