Economy

Asia-Pacific region was slowing even before Covid-19 pandemic: ESCAP Survey

TV Jayan New Delhi | Updated on April 08, 2020 Published on April 08, 2020

The health crisis should prompt countries to grow more sustainably and adopt a long-term vision for development, says ESCAP Director

The Covid-19 pandemic is having far-reaching economic and social consequences for the Asia-Pacific region, with strong cross-border spillover effects through trade, tourism and financial linkages, said a new report from the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released on Wednesday.

The Economic and Social Survey of Asia and the Pacific 2020 said most countries in the region were going through an economic slowdown much before the Covid-19 pandemic hit, but the health crisis has further deepened this slowdown. Although there are significant uncertainties surrounding the pandemic, the negative impacts are likely to be substantial, the report said.

Key messages

Unveiling the report, Hamza Ali Malik, Director of Macroeconomic Policy and Finance for Development Division, said there are three key messages that emerged from the report. They are: there is a need to revisit the economic growth-centric development model; the current health crisis should be used to grow more sustainably; and it is time to adopt a long-term vision for development.

“The economic growth-centric (GDP-centric) development approach pursued in the region has not been people and planet-friendly. There is a need to revisit this economic growth-centric approach,” said Malik, who began his presentation quoting Indian writer Arundhati Roy’s article ‘The Pandemic as a portal’, in which she called the chase for GDP growth as ‘doomsday machine’.

Normalised GDP growth in the region has been on an upward trajectory over the last 20 years. It has reaped benefits for the economy, for instance, through employment generation, income generation for people and poverty reduction, Malik said. While the economic growth helped reduce poverty at $1.90 per day scale, there has been increase in poverty levels when $3.20/day or $5.50/day scales are used, indicating growing inequalities in societies, he said.

As regards GDP growth in the region, ESCAP had projected the growth in 2019 to come down to 5 per cent from 5.3 per cent in 2018, but because of on-going economic slowdown the growth fell further to 4.3 per cent. This would be substantially lower in the coming year, due to the economic impact of Covid-19, Malik said.

The countries in the region were failing to achieve most of the Sustainable Development Goals, and have, in fact, fallen further back in two SDGs — ‘responsible consumption and production’ and ‘climate action’ — in the year under review, the ESCAP official said.

Health emergency spending

The current economic slowdown has been considerably exacerbated by the Covid pandemic. According to the report, the policy response to this should be primarily focussed on people’s lives and their health and, subsequently, the economic recovery. However, the countries should use this crisis as an opportunity to continue the journey towards the 2030 agenda of achieving the SDGs .

The pandemic and climate emergency, the report said, will essentially require policy-makers to move away from ‘short-termism’ to long-term vision. This would require collective policy actions across the board from governments, businesses as well as consumers.

The Survey said as governments respond to the unprecedented health crisis and introduce economic stimulus packages, Asia-Pacific developing countries should increase health emergency spending by $880 million per year. It called on the member-countries to consider establishing a regional fund to respond to future health emergencies.

Unsustainable consumption and production patterns have substantially increased greenhouse gas emissions, exacerbating the vulnerability of the region to climate change. Additionally, $240 billion worth of annual subsidies continue to feed the region’s heavy dependence on fossil-fuels.

Published on April 08, 2020

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