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Emerging Markets

Asia leaders warn of unrest

Fallout from the global financial and economic crisis raises the spectre of “social and political unrest” in many countries of Asia and elsewhere, Indonesian president Susilo Bambang Yudhoyono warned on Monday

Fallout from the global financial and economic crisis raises the spectre of “social and political unrest” in many countries of Asia and elsewhere, Indonesian president Susilo Bambang Yudhoyono warned on Monday.

His warning, delivered at the opening of the ADB annual meeting, was echoed by other governors of the bank who sounded the alarm about the threat the crisis poses to Asia’s poor and unemployed.

As a result of the crisis, “the real economy everywhere has been hard hit, millions around the world have been forced out of jobs and exports have sharply declined”, declared Yudhoyono.

“Poverty is worsening, businesses are struggling and we are seeing capital flowing from developing to developed countries in amounts never witnessed before.”

If “all this goes unchecked, down the road we could see social and political unrest in many countries”, he said. “We have no clear indication as to whether the worst is already behind us, or whether there is more bad news around the corner.”

It will be the “socially vulnerable poor who will be worst hit as the adverse effects of the crisis spill over into the real economy”, agreed Japanese finance minister Kaoru Yosano. The ADB must help to “protect the poor from further hardships” by “front-loading” its crisis response lending now that the bank has had its capital base tripled, said Yosano.

“The poor are feeling the brunt of the impact” of the global crisis, said US Treasury acting deputy assistant secretary Karen Mathiasen. “Unemployment and poverty are on the rise, putting UN millennium development goals ever further out of reach and threatening to set back recent advances in poverty reduction”, she added Xie Xuren, China’s finance minister, told the gathering: “Amid this unprecedented crisis, economic growth is prominently slowing down and the numbers of the unemployed and the poor are rising.”

Indonesian finance minister Mulyani Indrawati also stressed that Asia faces big problems. “Asian economies are challenged to take meaningful stimulus measures by focussing on strengthening domestic markets while maintaining fiscal sustainability and promoting activities that support regional and global trade.  “At a time when credit is extremely tight, this will present some major challenges”, she said.

ADB president Haruhiko Kuroda noted in his opening speech that 60 million more people than previously projected would remain “trapped in poverty” this year, and 100 million next year, as a result of the crisis. He called this an “alarming setback to our vision of an Asia and Pacific region free of poverty.”

“With global imbalances now unwinding, Asia needs to adjust. The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies. But the current state of the global economy suggests that era has passed.

“By rebalancing export-driven growth with greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course.”


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