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New Report Finds Asia-Pacific Region Faces Triple Economic Threat

A new report finds the Asia-Pacific region is facing a triple threat, as a consequence of the present global economic situation. The United Nations Conference on Trade and Development has just released the annual Economic and Social Survey for Asia and the Pacific which was researched and written by the United Nations Economic and Social Commission for Asia and the Pacific.

The world is faced with difficult economic times. The U.N. Conference on Trade and Development says the Asia-Pacific region also has two additional crises to face. These are the food-fuel price volatility and climate change.

The UNCTAD survey says, together, they add up to triple threats to development, which have to be tackled with vigor.

This is the second time in a decade Asia and the Pacific have been hit by a financial crisis. The survey finds reforms undertaken since 1997 in improved fiscal balances, banking reforms and foreign-exchange reserve accumulation made the region more resilient, at the beginning of the current crisis.

But, the report says that resilience started to erode in the fourth quarter of 2008. UNCTAD Economist Cape Kasahara says trade - the region's engine of growth - moved from double-digit growth to double-digit declines.

"So, the greater the external reliance the country's economy is to trade, particularly export, it tends to make that national economy rather vulnerable to the external shock," Kasahara said.

The survey says the Asia-Pacific region is more economically integrated with the rest of the world then with itself. It calls for more intra-regional trade and investment by implementing regional economic-cooperation agreements.

Almost two-thirds of the world's poor people and half of its natural disasters are found in Asia and the Pacific. UNCTAD says the number of poor people in the region is likely to increase, as a result of the economy and rising unemployment.

Kasahara says last year's record high oil prices of $147 a barrel caused food prices to skyrocket. He says this hit the poor particularly hard.

"Much of the food-price increase has a greater affect on the poor households, because they tend to have a high propensity to consume. They spend a large amount of the household budget on food items. Therefore, the major victims of the food-price shock to the national economy tends to be poor."

The survey says the triple crises are interlinked. Studies show natural disasters disproportionately affect the poor and the most vulnerable. The report says climate change threatens to worsen this situation by increasing the frequency and severity of natural disasters and crop failures in the region.

The U.N. report says government stimulus packages can reinvigorate the economy, in the short term. They also can address long-term issues by investing in food and energy security, social safety nets, disaster risk reduction and green technology.