Effect of the crisis
Photo: UNDP Pakistan/Marta Ramoneda
The garment industry in Pakistan is badly
affected by the world economic crisis.
The huge impact on Asia from the global economic crisis has destroyed the ‘myth†that countries can live in isolation. Asian equity and financial markets have moved in lip-synch with global markets – mostly downward. Moreover, unlike the financial crisis of 1997 when Asian countries could export their way out of the crisis, that option no longer looks so viable. This time Asia must find its own solutions and in doing so help the rest of the world.
Some 300-400 million people came out of extreme poverty in the last decade in Asia and overall it is on its way towards meeting the Millennium Development Goals. But with the Global economic crisis not only is further progress at risk, but even some of the recent gains could be reversed. The girls working in garment export factories in Cambodia, Bangladesh and Sri Lanka, diamond cutters in India, factory labor in China’s coastal cities, migrants from South Asia and Philippines and Indonesia are all affected by the crisis, many of whom will be unemployed and will return to the farm.
Moreover, Asia’s middle class which now numbers some 1.5 billion people in Thailand, Malaysia, India and China, and many young aspiring upwardly mobile will have their dreams of a better life thwarted. We are already seeing large unemployment, school drop-outs, and health impacts as well are social strife. We are also seeing the first signs of growing protectionism and are concerned that a race to the bottom may develop through weakened currencies and special export incentives to keep market share.
Videos
Ajay Chhibber, Assistant Administrator of United Nations Development Programme (UNDP) and Director of Regional Bureau for Asia and the Pacific, speaks on the economic crisis.
Watch address to the ESCAP Ministerial Meeting on the impact of the economic crisis>>
What are we doing?
Asia needs to do three things : first, spend more money – both by government and the private sector so both fiscal and monetary stimulus is needed and is being implemented; second more intra-Asian trade as Asian countries are still more integrated with the rest of the world than with each other, and third better social assistance and social protection systems.
UNDP is working with countries , to help them on these three issues with a special focus on the social impacts and better targeted social assistance programs (such as conditional cash transfers) and use the crisis to encourage social protection – old age security, health insurance, housing finance, which will also help boost consumption.