This story (see below) is what concerns me in relation to y2ka (a for aftermath.) Last year the BBC on-line did an excellent series on the Asian crisis in their economics section. The last time I checked coverage had declined because it was not longer fresh "news." Those earlier articles are still well worth reading.
msnbc.com
In Singapore earlier this year, some store owners ran 'recession sales' in hope of luring back shoppers who have become increasingly conservative about their purchases.
Asia's wounded middle class
The once-thriving consumers struggle to make ends meet
By Michael Bociurkiw
MSNBC
April 19 — The middle class, so ballyhooed during the era of the “Asian miracle,” is hunkered down, still smarting from a 20-month long economic crisis that has gouged spending power, bloated unemployment lines and reduced access to services ranging from health care to education.
Asian economies on the mend, Asian Development Bank says.
‘Standards of living are falling as inflation outstrips any increase in nominal incomes.'
— ASIAN DEVELOPMENT BANK REPORT
THIRTY MILES NORTH of Bangkok at the Bungkumratbamrung primary school the impact is evident. This year, at least 20 students transferred from private schools to the free public school, says the school's director.
“One-third of parents in the area have lost their jobs due to the economic crisis,” an Asian Development Bank official who visited the area says. “It's not only the tuition they can no longer afford, but also the books, uniforms and transportation.”
Unlike Asia's stock markets, which are springing back to life, average Koreans, Indonesians and Thais — among others — are having a hard time regaining the standards of living they enjoyed before a series of currency devaluations sent the region's economies into a downward spiral beginning in July 1997. As a result, options have been limited and choices made tougher.
A Thai college student studying business in Seattle says his family can no longer afford his education and living expenses. The student, who asked that his name not be used, now faces the choice of transferring to a less expensive college in Houston — where he can board with his sister — or return home.
A report released Monday by the Asian Development Bank (ADB) documents the havoc the region's economic downturn is creating not only for the poor, but also for the once up-and-coming class of consumers. With significant declines in spending power, the report says that middle class Asians are being financially pinched, so much so that even access to services from health care to education have been severely curtailed. “The impact of the crisis is pervasive, hurting all social classes, particularly middle- and lower-middle income ones,” the Manila-based bank said in its annual survey, “the Asian Development Outlook.”
INVESTMENT, POLITICS, STABILITY
Belief in the rapid growth of an Asian middle class has been the basis for much of the foreign investment in the region over the last decade. But confidence has been severely dented in the last two years. In Hong Kong, for instance, three Japanese department store chains — Daimaru, Matsuzakaya, and Tokyu — which had expanded rapidly to cater to the middle class, are closing their doors. Retail sales in Hong Kong fell 22 percent, year on year, in September.
The political dimension to the economic travails has been equally concerning. Asian governments, especially Malaysia and Singapore, have relied heavily on economic stability for support from members of the burgeoning middle class. Racial harmony in such diverse countries, analysts say, has also been linked to economic well being.
In Malaysia, autocratic leader Mahathir Mohamad, who has introduced unorthodox measures to boost the economy, stands to loose substantial support in upcoming elections from his own middle class if their purchasing power continues to slip, analysts say.
ASIA WITHOUT A NET
In many Asian economies, the lack of social safety nets has made the impact of inflation worse, says the ADB. On lower income groups, the ADB says: “The crisis is setting back the spectacular strides made in the fight against poverty during the last two decades.”
The ADB's findings echo the conclusions of another report issued this month by the United Nations Economic and Social Commission (ESCAP), which said: “The economic crisis has turned out to be more long lasting, widespread and deeper than had been foreseen, causing dramatic and severe social problems.”
Among the key ADB findings:
Fewer middle-class Asians can afford quality health care. Malaysian private hospitals report as much 50 percent drop in the number of patients seeking treatment. In Indonesia, many people are shifting from modern treatment back to traditional healers and even self-treatment. Singapore's private hospitals, which once relied on free-spending, well-heeled Indonesians and Malaysians have seen this lucrative market dry up. The ADB cites “massive shifts” of clients from private to public providers.
As tensions increase due to economic hardship, domestic violence is on the rise in Asian homes and there is a “weakening of community cooperation and participation.” It adds: “The informal norms and social relationships that enable people to cooperate in pursuit of a common benefit are breaking down as a result of the crisis.”
Recent strides in the fight against AIDS in the region will be set back by higher drug prices, while cutbacks in family planning programs could result in a rise in the birth rate and a “substantial” increase in the number of abortions.
Environmental degradation is on the increase, affecting both the rich and poor. Some governments are devoting fewer resources to environmental protection programs, while Asians hit by the crisis are seeking desperate measures to survive. “Household attempts to obtain additional income often lead to increased environmental destruction.” Indeed, forest fires in Indonesia, caused in part by slash-and burn land clearing by Indonesian farmers, brought a new wave of haze over Singapore and southern peninsular Malaysia this week.
In Indonesia, the ranks of the middle class are no longer growing. Instead, the poverty rate will jump from 11 percent in 1996 to 14 percent in 1999, adding about 6 million Indonesians to the poverty rolls, according to the Bank. It expects unemployment increases in Indonesia, Thailand, South Korea and the Philippines. In Malaysia, where a shortage of workers required the import of foreign labor as recently as 1997, now has an unemployment rate of 7.7 percent.
School dropout rates are increasing around the region — especially in Indonesia and Thailand, where more than six million and 250,000 have dropped out respectively.
The average rate of Consumer Price Inflation (CPI) continues to rise, exacerbated by severe currency devaluation. In Southeast Asia - which the ADB describes as “the vortex of the Asian financial crisis”-the inflation rate was a whopping 21 percent in 1998, a fourfold increase from the previous year. Most affected were food, gas and electricity prices. “Standards of living are falling as inflation outstrips any increase in nominal incomes.”
Though laden with bad news, the ADB's report does shed some bright light in the long term. ADB President Tadao Chino says the affected economies have “largely bottomed out.” .
However, significant recovery is still a long way off. Confirming the fears of Asian leaders and analysts, the ADB says that Asia's economic growth will recover only “gradually” in 1999 — expanding to 4.4 percent from 1998's 2.6 percent, still a far cry from the nearly double digit decade of the late '80s and early '90s. |
