Exchange management holding back Asia-Pacific
 

Shibani Dasgupta
 

China, India and Japan are fast becoming the locomotives of global growth but poor exchange management and discrimination against women is holding them back. If they genuinely wish to be among the leading economies of the world then they need to rectify this soon.

The Asia Pacific region suffers from two major drawbacks that will need focused attention if it has to surge ahead in development matters in the coming years – they are better management of exchange rates and reduction in inequality and discrimination against women.

The UN Economic and Social Commission for Asia and the Pacific (UNESCAP) annual economic and social survey of Asia and the Pacific has made these observations in its report entitled "Surging Ahead in Uncertain Times."

The region's oldest and most comprehensive annual review of economic and social developments forecasts the external environment in Asia Pacific to be less favourable in 2007, mainly due to the slowdown of the US economy and a moderate decline in global economic demand, but sees continued dynamism despite risks of further oil rice shocks and a sharp depreciation of the US dollar.

As a whole, the 2007 outlook is more than 7 per cent economic growth, noted ESCAP executive secretary Ki, Hak-su ahead of the launch.   The three big Asian economies – China, India and Japan – will maintain the growth momentum and may provide good opportunities to other developing countries of the region.

The survey said the region is becoming the locomotive of global growth.   Developing economies in Asia Pacific region accounted for 16 per cent global output and one third of world economic growth in 2006.

In a special study on the cost of gender discrimination to the region's economies, the 2007 Survey estimated that the region is losing $40-42 billion a year due to restriction on women's access to employment and another $16-30 billion a year because of gender gaps in education.

The Bangkok based UNESCAP forecast major currencies in the region to appreciate as a result of capital inflows and imbalances in the US economy.   According to the 2007 Survey, the region's central banks could choose any two of the three policy option: targeting exchange rates, having an independent monetary policy or keeping capital accounts open – but not all three.   It saw greater exchange rate flexibility as one sustainable solution that would take away the one way bet that encourages speculative capital inflows.

The Survey warned that interventions by monetary authorities to keep currencies down were leading to inflated asset values, especially in housing and equity markets.   According to the Survey, developing economies in the Asia Pacific were expected to grow at an impressive 7.4 percent in 2007, though down from 7.9 percent in 2006.

The report stressed that inequality and discrimination against women costs Asia Pacific economies almost US $ 80 billion a year due to restrictions in access to employment and education.

The Survey for this year 2007 said the costs were occurring despite considerable gains in reducing discrimination and improving education in recent decades, including women's life expectancy, lower infant mortality rates, better literacy rates and greater female political participation.

But, the survey said many gains are often patchy and uneven across the region with South Asia economies among those likely to benefit the most from reductions in discrimination.   It also stressed that major changes can be made with little cost and called for political commitment to support women and girls in areas as basic as primary education.

In North and Central Asia, south Asia and Pacific Island countries finding show the female to male ratio in the population is deteriorating due to women's inadequate access to health services.   In some countries, one in every 10 girls die before reaching the age of one, one in every 50 women dies during pregnancy and delivery, the survey said.

Meanwhile, violence against women continues unabated, it continues, indicating the impact of empowerment of women in many households.   Blocking the access of women and girls education and health is detrimental to human capital development and labour free participation, and thus to individual welfare and economic growth, the survey said.

Across the region, female primary school enrollment can be as much as 26 percent lower than that of males.   This has significant implications in terms of productivity as well as women's health by imposing additional economic costs – added to them are social and personal costs, both direct and indirect, it added.

And as we already know through the experience gathered in India, the spill over costs include higher service charges for drugs and transport, loss of income and education during times of illness, lower productivity – reducing income and output.

An indirect impact spill over is to children's health, as mothers with lower education and lower incomes are unable to provide adequately for their children.   It also means a smaller labour force as life expectancies are cut short.

The survey called for a range of recommendations to enable the region to benefit economically from the elimination of gender discrimination.

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