FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Global gloom hovers over South Asian economy
Updated:Oct 23, 2011
 
Print
Share
  
increase Font size decrease Font size
 

The South Asian economy will suffer due to the global debt crisis that is spreading fast and taking the shape of a double-dip recession, South Asian experts said yesterday.The region was largely insulated from the 2008 global financial crisis because of fiscal stimulus. But this time all regional economies face some difficulties including soaring inflation, depreciation of local currencies, slowdown in export and remittance, hike in interest rate and climate change.They made the observations at the Fourth South Asia Economic Summit (SAES) organised by the Centre for Policy Dialogue (CPD) at Ruposhi Bangla Hotel in the capital.

The experts also came up with some suggestions such as boosting regional demand, cooperation and integration to tackle the looming crises.Noted economist and CPD Chairman Prof Rehman Sobhan presided over the inaugural session of the summit attended by stakeholders from the government, private sector, and civil society. Finance Minister AMA Muhith spoke there as chief guest.“Global economy is unlikely to return to pre-crisis level soon. We should be mentally prepared to live with it for two-three years,” said Ashfaque Hasan Khan, principal and dean of the Department of Economics of NUST Business School in Pakistan.

The ongoing debt crisis in Europe and the deceleration of growth in the US have created widespread uncertainty and nervousness in the global economy, he said.Khan, a former economic adviser to Pakistan's finance ministry, said export growth of India, China and Pakistan is slowing down with depreciation of local currencies against the dollar for the debt crisis.The devaluation causes a rise in inflation and invites tightening of monetary policy that increases costs of capital and hurts investment, he noted.

Economist Wahiduddin Mahmud said adverse episodes in the global economy will come through energy, food or other commodities. And the transmission of the effect of such crises may vary from country to country.“We have to learn the lesson to live with such episodes,” Mahmud said.Commenting on food crisis and Bangladesh's dependence on import, he said global grain prices will remain high, Bangladesh vulnerable to price shocks.

The noted economist, however, said such crises also offer scope for undertaking unfinished reforms. He suggested a regional strategy to ensure food security, and said opening up of regional food trade may create a win-win situation for all.CPD Distinguished Fellow Debapriya Bhattacharya said there is no doubt that the crisis is going to hurt South Asia.It would be much more difficult to put in place a response mechanism, said Bhattacharya.

Nagesh Kumar, chief economist of the United Nations Economic and Social Commission for Asia and the Pacific, predicted that a double-dip recession is building up very rapidly.The slowdown has already started affecting exports of many countries including the South Asian nations, said Kumar.According to him, the current crisis is different from the previous one in 2008, as the policy options for developed economies are much more limited now. It prevents the government from spending, he said.“Recent volatility in capital flows and depreciation of local currencies against the dollar also affect the South Asian economy, including India,” said Kumar.

The economist suggested greater transparency and regulation of futures and derivatives markets as well as regulation of conversion of food into bio-fuels.The rise in prices is not for demand pressure only, but also for increasing financialisation of commodity markets and speculative activity, he said.Additional demand within the region could minimise the impacts of sluggishness on developed countries, the economist said.

Foreign exchange reserves in the Asia-Pacific region stand at more than $5 trillion, which can be mobilised for the region's development needs, especially for reducing infrastructure gaps, Kumar said.Kalpana Kochhar, chief economist of the World Bank's South Asia region, said, “Global economy has entered a danger zone and South Asia is not totally immune to the volatility in capital markets.”The region requires rebuilding of fiscal space for countercyclical policy and dealing with urgent social and infrastructural needs.

Sarath Amunugama, senior minister for International Monetary Cooperation of Sri Lanka, called for deepening regional cooperation in South Asia to tackle all challenges.“The agreements that had already been signed should be implemented first. At the same time, new ideas should be taken for actions to materialise the potential benefits the region has,” said Amunugama.

Sir Fazle Hasan Abed, founder of Brac, the world's largest NGO, said if the crisis hits again, the poor would be affected badly.Poorer people are affected more than others for having fewer buffers. They also lack assets, he said.Former Saarc Secretary General Ibrahim Hussain Zaki called for a regional integration for mutual benefits.Earlier, Finance Minister AMA Muhith inaugurated the summit.

Muhith pinpointed five areas of priorities -- food security, water and sanitation, connectivity, energy development, and trade and human aspects of migration -- in terms of regional cooperation and integration.He said the currency volatility should be discussed.Muhith said he opposes hydropower as it obstructs natural flow of water.“Harnessing solar energy is the best way for us,” said the finance minister.CPD Executive Director Prof Mustafizur Rahman delivered the address of welcome.

( DAily Star Online)

 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Indonesia’s President Joko Widodo has confirmed his presence for the occasion. In an exclusive interview with INDIA REVIEW & ANALYSIS, Indonesia’s Ambassador to India, Sidharto R.Suryodipuro, reminded Nilova Roy Chaudhury that the first Chief Guest for India’s Republic Day celebrations, in 1950, w
 
read-more
The words of Ho Chi Minh  “Nothing is more precious than independence and liberty” rang true for the people of the erstwhile East Pakistan when, with increasing brutality, the West Pakistani oppression spread across the land, writes Anwar A Khan from Dhaka
 
read-more
In a significant boost to New Delhi's Act East Policy, India and Japan set up the Act East Forum on Tuesday as agreed during Japanese Prime Minister Shinzo Abe's visit to India this year for the annual bilateral meeting that would help to focus and catalyse development in India's Northeast.
 
read-more
  United States Secretary of State Rex Tillerson reiterated on Friday Washington's warning that “all options are on the table” to meet North Korea's nuclear threat while offering to keep the lines of communication with Pyongyang open.
 
read-more
The 15th trilateral meeting of the foreign ministers of Russia, India and China concluded in New Delhi on Monday with many nuanced takeaways embedded in the joint statement of 46 paragraphs. Reiterating that the forum “is not directed against any other country”, the statement underlined the importance of the establishment o
 
read-more
The first thing that one sees when a flight approaches New Delhi is thick smog that envelopes the city and its lack of greenery.  In almost all other major cities of India lack of greenery is the most obvious sight that one sees when approaching it by air.
 
read-more

Pakistan has agreed to allow the rupee to depreciate after holding talks with the International Mone­tary Fund (IMF) on the country's economy.

 
read-more

Two major global changes in the past year; the ‘Brexit’ referendum and the advent of Donald Trump, writes Sandeep Kaur Bhatia

 
read-more

It is also imperative for India to explore other regions for markets. Its trade deficit with Latin America has been narrowing. Also, its trade with Mexico, Colombia and Guatemala has increased, ...

 
read-more
Column-image

Over the last 25 years, India's explosive economic growth has vaulted it into the ranks of the world's emerging major powers. Long plagued by endemic poverty, until the 1990s the Indian economy was also hamstrung by a burdensome regulat...

 
Column-image

Title: A Ticket to Syria; Author: Shirish Thorat; Publisher: Bloomsbury India: Pages: 254; Price: Rs 399

 
Column-image

Gorichen, a majestic peak in the Eastern Himalayas at an altitude of 22,500 feet, is the highest in Arunachal Pradesh. Beautiful to look at and providing a fantastic view from the top, it is extremely tough climb for mountaineers.

 
Column-image

It is often conjectured if the reason for long-standing conflicts and insurgencies, in the developing world, especially South Asia, is not only other powers fishing in troubled waters but also the keenness of arms industries, mostly Western, to...

 
Column-image

Title: The People Next Door -The Curious History of India-Pakistan Relations; Author: T.C.A. Raghavan; Publisher: HarperCollins ; Pages: 361; Price: Rs 699