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Asia-Pacific poor face triple crisis--UN agency

ASIAN and Pacific countries are particularly vulnerable to the triple threat of food and fuel price volatility, climate change and the global economic crisis, a United Nations agency said on today.

This is because the region has almost two thirds of the world's poor and half of its natural disasters, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said in a regional survey.

The emergence of all three crises at the same time has "hit the world's poor the hardest," said ESCAP Executive Secretary Noeleen Heyzer.

She said there was a significant risk that the financial crisis could result in political instability and social unrest.

"Unless we deal with growing inequalities, especially on the poor, it will create greater social stress," Heyzer told reporters at the launch of the survey in Bangkok.

As the global downturn hits economies from Thailand to Taiwan, migrant workers are losing their jobs and often return home with hefty debts and little hope of finding work.

It also means slower economic growth for countries such as Bangladesh and the Philippines which are deeply reliant on remittances sent home by migrant workers.

All this makes it very hard for communities under stress to survive and requires a more inclusive model for economic growth, Heyzer said.

"This requires setting up social protection systems that increase income security and free up the spending power of middle and lower-income people who drive the economy," she said.

Most countries in the Asia-Pacific region lack a European-style social safety net. More than two thirds of the region's elderly do not receive pensions and only one in five people get some form of health care.

As many governments take a bigger role in the economy through higher public spending, the crisis offers an opportunity to draw up development policies that are more inclusive and sustainable, the survey said.

ESCAP forecasts developing Asian economies will still manage to grow by 3.6 percent this year after 5.8 percent in 2008. But that masks wide regional variations, with China forecast to grow 7.5 percent and Kazakhstan only 1.5 percent.

But the developed economies of Japan, Australia and New Zealand will contract by a combined 2.2 percent after growing 2.6 percent in 2008, it said.

One of ESCAP's functions is to promote economic and social progress in the region, and a UN official conceded that the forecasts, based on data at the end of February, could err on the optimistic side.

Asian countries have been particularly badly hit by the slowdown in global trade -- forecast by the World Trade Organisation to contract 9 percent this year -- as demand shrivels in advanced economies.

While domestic demand is important in the larger Asian nations such as India, Indonesia and China, exports dominate small economies such as Hong Kong and Singapore.

"The fact is that the Asia-Pacific region is more economically integrated with the rest of the world than with itself," Heyzer said.

Intra-regional trade among developing countries accounts for only 37 percent of exports in the region, while that with North America is 51 percent and European union 68 percent.


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