Economic downturn, developing alarmingly across Asia, is more widespread than previous crises. Three-quarters of economies in the region would shrink this year, according to the recent forecasts by the Asian Development Bank (ADB).Asia’s GDP would decline by 0.7% in 2020 and, ADB said it was the first such contraction since 1962.
The trends in China indicate that its growth would expand 1.8% this year, accelerating to 7.7% in 2021, up from a previous forecast of 7.4%. The ADB reported that the successful public health measures in China have been facilitating economic growth. However, the other Asian countries, with negative trends in their economies and poor public health infrastructure, are in the dreadful situation. Most of them had wrongly followed the neoliberal prescriptions of the IMF and World Bank. They opened up their economies for the profit-mongering of the private corporates for over 30 years and neglected the basic requirements of the poor, including the basic health services.
Deterioration in economic activities and the persisting pandemic problem with rising level of Coronavirus infections in Asian region need collective determined efforts. But the muted reactions of the international organizations including the UN, IMF, World Bank, WTO, etc., have been exhibiting the necessity of active roles by regional groups. The role of regional groupings has become an important factor in the COVID-19 pandemic situation. The cooperation of regional groupings and collective efforts could be mutually beneficial and contribute to defuse the situation in the Asian nations and render help to the poorest in substantial ways.
Association of Southeast Asian Nations (ASEAN) consists of 10 members, including Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. It is one of the most stable organizations in the world. The ASEAN+3 consist of the 10 members of ASEAN, plus China, including Hong Kong, Japan and South Korea. The GDP growth of ASEAN+3 is expected to plunge to 0% this year, from 4.8% in 2019.
The economies of ASEAN+3 countries are economically heterogeneous. But all countries have larger informal economies with more flexible labor markets. Since many countries have weaker social safety nets, the working populations in these countries are under serious risk.ASEAN+3 countries have to collectively reorient their policies to strengthen the social safety nets and direct income-support schemes to deal with the current health disaster and economic downturn. However, many ruling governments are following the most ineffective ways of changing the labor laws and snatching away the rights of the workers. They implement such anti-labor policies to attract private capital investments, the strategy that proved most ineffective during recessionary periods.
On Sept. 13, the foreign ministers of all ASEAN member countries, in an ASEAN-India virtual meeting, discussed ways to strengthen cooperation to fight the COVID-19 pandemic and reviewed the status of ASEAN-India cooperating in several areas including maritime cooperation, connectivity, education, capacity building and people-to-people contacts.
The 10-nation ASEAN along with India comprised a combined population of 1.85 billion people, one-fourth of the global population, and their combined GDP was around $3.8 trillion. While the amount spent on people-centered measures, such as social benefits was about 5% of GDP in the euro zone, it was around 1.1% of GDP in most of the ASEAN+3 economies. More measures to get a wider tax net, increased taxes on the big corporates, heavier infrastructure spending by the governments, extension of unemployment coverage and social benefits could stabilize the Asian economies.
Another influential grouping in Asia was the Shanghai Cooperation Organization (SCO), an eight-nation regional grouping that represents around 42% of the world’s population and 20% of the global GDP.The countries representing SCO are China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan and four observer states which include Afghanistan, Belarus, Iran and Mongolia.
During 2020, India will be the chairman of the SCO council of heads of government and the summit is to be held on Nov. 30, on the trade and economic agenda of SCO. Since the countries of SCO are all facing recessionary crises, the economic cooperation to build momentum in employment oriented economic activities have gained utmost importance.
The South Asian Association for Regional Cooperation (SAARC), the regional intergovernmental organization in South Asia, comprising Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka, is also meeting in September 2020 and there was a growing realization that the SAARC is most relevant today in spite of many conflicts between SAARC countries, especially between India and Pakistan. In his analysis in Indian newspaper, Hindustan Times, Sanjay Kathuria, senior visiting fellow of the Centre for Policy Research, wrote: “Making SAARC more effective will be a win for everyone, especially the people of South Asia.”
The East Asia Summit ministerial meeting of the 10-member ASEAN, China, Japan, South Korea, India, Australia, New Zealand, Russia and the United States was held in the last week of August via video conference and the meeting stressed the importance of strengthening regional economic cooperation and accelerating post-COVID economic growth.
For a longtime, the foreign policy approach of the US towards Asia was based on its big business interests. Such approach had all along obstructed the emergence of meaningful institutions and multilateral collective efforts to solve the problems of the Asia’s poor. To safeguard the interests of big global corporations, the so called containment of China-policy was followed by all US administrations in the past.
The Obama administration had unnecessarily clinched a series of security agreements with Asia-Pacific countries, such as Australia, Japan, and Vietnam, and formed the Trans–Pacific Partnership (TPP). The goal of TPP wasn’t to serve the Asia’s poor, but instead not “to let countries like China write the rules of the global economy.”
However, the Trump administration moved fiercely in the direction of furthering the corporate oriented hegemonic US interests. In 2017, Trump withdrew from the TPP and imposed tariffs on Chinese goods. He took these steps not to serve the American people but to put pressure on Beijing to comply with American corporate interests. Actually, President Trump has intensified the cold war between China and the US.
The US has all along been discouraging independent regional multilateral institutions. President Trump sent a mid-ranking cabinet official to the East Asia Summit in 2019, making clear that multilateral institutions have no place in his Indo-Pacific strategy. The unilateral approach of the Trump administration hindered the prospects of genuine multilateralism in the Asian region.
According to International Monetary Fund estimates, developing countries would need more than $2.5 trillion in financing to deal with the current downturn. In this critical situation, they could never be able to attend their debt-burden. The IMF and World Bank have to cancel the debt of the poorest countries to boost funding to avoid a more serious global economic meltdown.
In April 2020, the Group of 20 countries, recommended suspension of the debt service obligations of the poorest countries. But the outright cancellation of all debts is imperative to save those poor countries from severe economic collapse.
The combined, multilateral efforts of the concerned governments, the collective actions of regional groups and the power of united voices of the peoples’ movements in these countries can only save Asia from doom.
N. Gunasekaran is a political activist and writer based in Chennai, India.
From The Progressive Populist, November 1, 2020
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