Ethnic people in Minh Quang Commune, Ba Vi District, Ha Noi receive a health check. The recent global crisis have pushed 14 million people back into poverty despite reported increasing prosperity. — VNA/VNS Photo Dinh Tran
HA NOI — How to ensure that Asia's increasing prosperity reaches all of its people after the recent crisis pushed an estimated 14 million people back into poverty was the tough question challenging an international conference in Ha Noi yesterday.
Addressing the conference, co-organised by the State Bank of Viet Nam (SBV) and the International Monetary Fund (IMF), IMF first deputy managing director John Lipsky said Asia was benefiting from the emerging global recovery and paving the way for stronger global growth.
"Net portfolio capital inflows surged to close at historical highs by the end of 2009, compensating in large part for the sudden stop of capital flows – including bank loans and direct investment – that was associated with the crisis," he told the meeting attended by more than 140 delegates from 16 countries.
Although emerging Asia was expected to grow by 8.5 per cent this year overall and the regional developing countries had been weathering the crisis well, a significant number of Asian citizens remained poor or vulnerable, Lipsky said.
Before the crisis, poverty in Asia had fallen dramatically. World Bank statistics indicated that the number of East Asian citizens earning less than US$2 a day had fallen to less than 500 million, down from a billion in 1990, and that the improvement in living standards was unprecedented in world history.
But poverty returned with the crisis, particularly agricultural poverty because "in developing countries, even small economic dislocations can provoke substantial challenges," said Lipsky.
"When jobs are lost, when remittances are cut off, and when food prices soar, poverty will increase and social indicators will worsen."
Meanwhile, poverty did not seem to be a serious problem in Viet Nam, said SBV governor Nguyen Van Giau. Despite the credit crunch, the fight against poverty remained high on the Government agenda.
Vietnamese statistics indicated that the country was winning the battle, with the poverty rate dropping from 14 per cent before the crisis to about 11 per cent currently, said Tran Du Lich, member of the Viet Nam National Assembly's Economic Affairs Committee.
Unemployment was not as bad as expected either, he said.
"Predictions indicated that 40 per cent of Vietnamese small and medium enterprises might go bankrupt during the credit crunch, but that did not happen," Lich said.
The country was one of among a few countries that maintained a 5.3 per cent growth rate in 2009 while it also ensured social security, said SBV deputy governor Nguyen Van Binh.
British researcher Duncan Green agreed, but added that this crisis was not as devastating as the one that hit Asia in the late 1990s.
Although the governments in Asia, including Viet Nam, coped well during the crisis, they were lucky because the recession was quite short, said Green, the head of research at Oxfam Great Britain.
He expressed his doubt that the country would continue to do well if another crisis hit.
Therefore, good preparations should be made.
Some Asian countries, such as Viet Nam with its social protection measures already in place, were able to cushion the impact on the most vulnerable citizens from the slowdown, said Lipsky.
"One of the lessons learned is that in order to be okay in a shock, you need to get things right before the shock," said Green.
Social protections measures could include cash transfers and unemployment insurance, on which about 1-3 per cent of GDP should be spent, he said.
To ensure the region's increasing prosperity reaches all Asians, the income gap must be reduced, and the health, education and social safety net strengthened to ensure future sustainable growth, Lipsky said.
Public infrastructure, particularly in the areas of energy, transportation and sanitation also needed to be improved, the conference heard.
Conference participants also agreed that measures to contain inflation, ensure sound fiscal policies and strengthen the financial sector should be pursued.
With regards to Viet Nam, economist Vu Thanh Tu Anh said it was time the Vietnamese Government drew on the lessons learned and carried out a series of structural reforms by stabilising the macro economy, improving the fiscal environment and enhancing development policies. —VNS