Asia’s developing countries face a bumpy ride in the year ahead as a slowing United States economy and a weakening of the dollar will hit the flow of exports to that western giant, warn economists from a regional UN body. Thailand and the Philippines were two countries singled out by the economists for already feeling the cost of this emerging economic scenario. Thailand saw a decline in export growth in August last year — a 17.3 per cent drop compared to the previous August — and the Philippines saw a 4.6 per cent drop in exports in September last year from the previous September.

The sectors most affected in that 2007 slide in Thailand were garments, furniture and rubber, added the economists from the Economic and Social Commission for Asia and the Pacific (ESCAP). The sectors hit in the Philippines ranged from textiles and furniture to agricultural ones, such as banana and pineapple. Currently, 15 per cent of exports from Asia and the Pacific goes to the US market, while 16 per cent exports feed the demand from the European Union. The US economy is expected to slow down from 2.9 per cent to two per cent growth. In addition, a weakening US dollar and strengthening regional currencies have made exports from Asia more expensive to US buyers.

The worst affected would be countries that depend on exports built around labour intensive products, a low-technology manufacturing industry and the agriculture sector, says Ravi Ratnayake, chief economist of the Bangkok-based ESCAP. Consequently, governments in the region should invest in programmes to help the poor and the economically marginalised, since they would be the “hardest hit” if the economic climate worsens, he added. “It is important for governments to think about some social-safety net in the event of a crisis to protect the vulnerable groups.”

According to the International Labour Organisation (ILO), such vulnerable groups are part of the informal working sector, which, in 2007, accounted for 60 per cent of the region’s labour force. Over a decade ago, when the financial crisis hit the region in 1997, some 66 per cent of the labour force belonged to the informal sector. “There has been progress made in the region to extend social protection for workers in the formal sector since the crisis, but we have not seen this in the informal sector,” Steven Kapsos, a labour economist at the ILO’s Asia-Pacific regional office in Bangkok, said. “Many of them work in the agriculture sector.”

The ILO estimates that there are nearly 900 million people across the region who fall into this vulnerable group, earning less than two dollars a day. But in 1997, the figure was much higher, accounting for about two-thirds of the labour force. The only Asian country expected to withstand a dip in the global economy is India, says Ratnayake. The South Asian giant will be aided by the investments in its expanding manufacturing and service sector and “more domestic demand”.

ESCAP’s note of caution, however, was balanced with the view that the broader outlook for 2008 would be robust, “with developing economies projected to grow by 7.8 per cent.” Yet that figure is lesser than the “impressive” 8.2 per cent growth rate the region achieved last year, revealed the UN body in an annual economic report for the region released this week. — IPS