UN Malaysia committed to assisting Malaysia in addressing "triple crises"

Mar 26, 2009

Kuala Lumpur, 26 Mar -The United Nations (UN) in Malaysia today hosted the country release of the 2009 Economic and Social Survey for Asia and the Pacific, titled, "Addressing Triple Threats to Development,” which spotlighted the convergence of three significant and inter-related threats - the global economic and financial crisis, Food-fuel price volatility and climate change - that is threatening development efforts in the region.  The findings of the Survey were presented by Dr. Mahani Zainal Abidin, Director General, Institute of Strategic and International Studies, Malaysia and Dr. Muhammad Hussain Malik, Macroeconomic Policy and Development Division, UNESCAP.

This year's Survey emphasizes that while most governments are focused on dealing with the worst economic crisis in many decades, two other longer term crises should not be neglected. Food-fuel price volatility and climate change are converging with the present economic crisis to create what is now being referred to as the triple threat. With almost two thirds of the world’s poor and half of its natural disasters, Asia and the Pacific is at the epicentre of the triple crises. The Survey provides a regional perspective as well as country-specific analyses, outlining ways in which economies in the region can move forward in unison towards a more inclusive and sustainable development path.

In his Opening Remarks, Kamal Malhotra, UN Resident Coordinator for Malaysia and UNDP Resident Representative for Malaysia, Singapore and Brunei Darussalam said that although the government had instituted a number of measures to stimulate the economy including introducing a 2nd stimulus package worth RM 60 billion, close to 9 per cent of the country’s GDP, Malaysia would face significant challenges in its real economy in 2009 transmitted through plummeting commodity prices, reduced demand for its electronic and other manufacturing exports and reduced foreign direct investment.

"The government has revised its estimates of Gross Domestic Product (GDP) growth which it now expects to be in the range of a negative 1 per cent to 1 per cent for this year, significantly below the earlier estimate of 3.5 per cent.  Nevertheless, some independent estimates suggest that GDP growth (or rather decline) in 2009 could be as low as a negative 5 per cent."

Touching on food security, Mr. Malhtora said that the country's high dependence on food imports has translated into higher food costs for a large proportion of the population, particularly the urban poor and those in rural areas who are net purchasers of food.

"The joint pressures of the food and energy price increase are already evident in costlier subsidies and food import bills. The lower purchasing power of many households, especially poorer ones, means that there is a real risk that some families could fall back below the poverty line while those already below it will need significant additional help. Poorer women and children are particularly at risk since higher food prices can worsen their already precarious nutritional status."

These challenges underscore the need to ensure that addressing vulnerability and food security should remain top policy priorities in addition to the creation of equitable and sustainable economic growth. Evidence- based policies for sustainable food production, maintenance of food buffer stocks, and contingency plans for food security and disaster risk reduction are equally essential. Existing informal and formal safety nets and social protection policies for vulnerable groups also need to be strengthened. "

Mr. Malhotra reiterated that the UN in Malaysia remained committed to assisting the country to address both the short-term implications of the crises and the more structural longer-term solutions that will be necessary if they are not to recur in the future.

In his presentation, Dr. Muhammad Hussain Malik provided an overview of the Survey and its main policy recommendations. "A comprehensive, coordinated and multilateral response is needed to tackle the triple threats of a rapidly evolving financial crisis, food/fuel price shocks and the climate change challenge. The gobal financial crisis and its adverse impact on real economies deserve immediate attention and coordinated policy responses to revive and accelerate economic growth. At the same time, we have to rethink where that growth takes place and whom it benefits.

"The Asia-Pacific region is better prepared for currency and balance of payment crises than it was a decade ago, having instituted wide ranging banking reforms, improved current account balances and built up a protective shield of foreign exchange reserves. Notwithstanding  this progress in the region, high levels of financial, trade and investment integration with the global economy exerted significant downward pressures on growth in the region with attendant social consequences that are still unfolding.

"Strengthening of domestic demand through fiscal stimulus packages and expansionary monetary policy can slow down economic downturn but it may not be sufficient to bring economic growth to pre-crisis level. Exports have played a major role in strong economic growth of so many countries in this regions and export growth needs to be revived again," he said.

In her presentation Dr. Mahani focused on the impact of the triple crises on Malaysia, maintaining that while there were inherent vulnerabilities, the country had shown resilience in the face of the global economic slowdown and the fundamentals of the economy remained strong. She said that the task at hand for policy makers was not only to boost economic growth but to look toward new markets, new sources of growth, new technologies and to invest in human capital in order to sustain growth.

The event here was attended by members of the media in addition to stakeholders from government, NGOs and academia.

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