ADB: Slowdown Mars Poverty Reduction Goals in Asia

MANILA — Large pockets of extreme poverty and hunger persist in Asia, where the global downturn makes it more difficult to achieve UN goals to reduce the ranks of the poor, the Asian Development Bank said Wednesday.

Supporting smaller businesses, where most Asians are employed, is key to fueling domestic demand and growth, the Manila-based lender said in a report on key economic indicators.

In 19 Asian economies, including the most populous China and India, more than 10 percent of people live on less than $1.25 a day and more than 10 percent are malnourished. This is despite the region's success over the last 15 years in cutting the number of poor from one in two to around one in four, the report said.

Nepal is the worst off with 55.1 percent of its population surviving on less than $1.25 a day. In China and India, 15.9 percent and 41.6 percent of the population live below the poverty line, respectively.

Income gap remains wide in many other countries.

More than 30 percent of Tajikistan's population suffers from hunger, as do 20-30 percent of the people in Armenia, Bangladesh, Cambodia, Mongolia, India, Pakistan, Sri Lanka and East Timor, the ADB said.

Among the so-called UN Millennium Development Goals is cutting in half extreme poverty and hunger by 2015 and reducing maternal mortality by three-quarters over the same period.

The report said that Asia faces serious challenges in meeting goals linked to sanitation and maternal deaths, which remain unacceptably high in countries such as Afghanistan, Nepal and Laos.

About 1,800 out of every 100,000 Afghan women die in childbirth while more than a quarter of urban households in 13 countries still lack access to improved sanitation, the bank said.

The ADB's chief economist Lee Jong-wha said it was too early to say if current positive economic signs in Asia and other economies mean a global recovery is taking hold.

For Asia to cope with the global downturn, it needs to strengthen domestic demand to sustain growth, said chief ADB economist Lee Jong-wha. Global demand for Asian exports was expected to remain sluggish, but the region could see a V-shaped recovery in 2010, he said.

"It's unlikely that Asia can export its way out of this slump, as they did after the 1997-98 Asian financial crisis," Lee told The Associated Press. "This crisis clearly shows that Asia cannot rely only on external demand but must diversify its sources of growth and revive its domestic industries."

"A return to a fast-growing developing Asia will require some rebalancing of growth toward domestic demand in the region as a whole," it said.

Governments should focus not only on fiscal stimulus and large enterprises but on supporting small and medium-sized enterprises—where most Asian workers are employed—to build a substantial urban middle class with spending power, he said.

They could do that by strengthening infrastructure, particularly transportation and electricity links, and removing regulations to make it easier to do business.

Lee said the ADB will revise its growth forecast for Asia in September.

In March, the bank predicted a 3 percent growth rate in 2009 for emerging East Asian economies and 6 percent growth in 2010, which is still below the 9.7 percent expansion in 2007.

Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.