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Millions in Asia falling into poverty
ASEANPLUS NEWS
Friday, 16 Oct 2020
AS the Covid-19 crisis derails economies worldwide, many of the newly poor will come from South-East Asia, dealing a huge setback to a region that had been prospering from a surging middle class.
The job losses are pausing the outsized boom South-East Asia has experienced in recent years, with economies possibly taking years to fully recover.
In the Philippines, which has the most virus cases in South-East Asia, a survey released on Oct 6 by the World Bank and local agencies showed that almost half of shuttered businesses were unsure when they could reopen.
The extended effects of the nation’s lockdown have been devastating to people like Manila resident Jenn Pinon, 35, who spent years working on a fine arts degree she hoped would make her financially secure.
Instead, she lost contracts she had won as a graphics designer, leading her to turn to selling eggs and hummus online. She has also been living in her churchmate’s unused condominium unit to keep living expenses low.
“I didn’t expect it at all, ” Pinon said of the work she has lost.
“I have to thank God that he gave me enough savings for now. Let’s hope it lasts.”
While incomes have plunged worldwide, the pandemic’s effects are especially severe in emerging parts of South-East Asia, where a wave of job losses and weak social safety nets mean that millions are at risk of losing their rung on the social mobility ladder.
The region is likely to come in second behind the Indian subcontinent in charting the number of new poor in Asia this year, said Ramesh Subramaniam, South-East Asia’s director general at the Asian Development Bank in Manila.
A lack of consumer demand, impending bankruptcies and social-distancing measures continue to impinge on the job market, according to Priyanka Kishore, an economist at Oxford Economics Ltd.
“In all, this points to a long, drawn-out recovery. We estimate South-East Asia’s GDP to be two percent below the pre-Covid baseline even in 2022, ” she said.
Last year, Bain & Co forecast that South-East Asia would add at least 50 million consumers to the ranks of its middle class by 2022.The prospect of US$300bil (RM1.24 trillion) in disposable income attracted the likes of Toyota Motors Corp and Ikea to expand here.
Now, disappearing incomes are stalling growth as consumption represents about 60% of the gross domestic product of the region’s major economies other than Singapore, says the Washington-based Centre for Strategic and International Studies.
As many as 347.4 million people in Asia-Pacific could fall below the US$5.50 (RM22.80) a day poverty line due to the pandemic, says the United Nations University World Institute for Development Economics Research.
That is about two-thirds of its worst-case global estimate and underscores the World Bank’s forecast of the first net increase in worldwide poverty in more than 20 years.
The toll has been tough on people like Indonesian Adi Muhammad Fachrezi, who was first in his family to go to college in 2014.
Showing tourists around Java’s towering volcanoes and white beaches earned him 20 million rupiah (RM5,600) a month and covered tuition and board. But that income dried up as the virus kept tourists away and he has had to put his studies on hold.
“I’m kind of ruined financially now, ” said Fachrezi, 24.
The magnitude of the economic free fall in South-East Asia’s five biggest economies was severe in the second quarter.
Indonesia shrank 5.3% year-on-year, Malaysia 17.1%, Philippines 16.5%, Singapore 13.3% and Thailand 12.2%, data compiled by Bloomberg showed. — Bloomberg
ASEANPLUS NEWS
Friday, 16 Oct 2020
AS the Covid-19 crisis derails economies worldwide, many of the newly poor will come from South-East Asia, dealing a huge setback to a region that had been prospering from a surging middle class.
The job losses are pausing the outsized boom South-East Asia has experienced in recent years, with economies possibly taking years to fully recover.
In the Philippines, which has the most virus cases in South-East Asia, a survey released on Oct 6 by the World Bank and local agencies showed that almost half of shuttered businesses were unsure when they could reopen.
The extended effects of the nation’s lockdown have been devastating to people like Manila resident Jenn Pinon, 35, who spent years working on a fine arts degree she hoped would make her financially secure.
Instead, she lost contracts she had won as a graphics designer, leading her to turn to selling eggs and hummus online. She has also been living in her churchmate’s unused condominium unit to keep living expenses low.
“I didn’t expect it at all, ” Pinon said of the work she has lost.
“I have to thank God that he gave me enough savings for now. Let’s hope it lasts.”
While incomes have plunged worldwide, the pandemic’s effects are especially severe in emerging parts of South-East Asia, where a wave of job losses and weak social safety nets mean that millions are at risk of losing their rung on the social mobility ladder.
The region is likely to come in second behind the Indian subcontinent in charting the number of new poor in Asia this year, said Ramesh Subramaniam, South-East Asia’s director general at the Asian Development Bank in Manila.
A lack of consumer demand, impending bankruptcies and social-distancing measures continue to impinge on the job market, according to Priyanka Kishore, an economist at Oxford Economics Ltd.
“In all, this points to a long, drawn-out recovery. We estimate South-East Asia’s GDP to be two percent below the pre-Covid baseline even in 2022, ” she said.
Last year, Bain & Co forecast that South-East Asia would add at least 50 million consumers to the ranks of its middle class by 2022.The prospect of US$300bil (RM1.24 trillion) in disposable income attracted the likes of Toyota Motors Corp and Ikea to expand here.
Now, disappearing incomes are stalling growth as consumption represents about 60% of the gross domestic product of the region’s major economies other than Singapore, says the Washington-based Centre for Strategic and International Studies.
As many as 347.4 million people in Asia-Pacific could fall below the US$5.50 (RM22.80) a day poverty line due to the pandemic, says the United Nations University World Institute for Development Economics Research.
That is about two-thirds of its worst-case global estimate and underscores the World Bank’s forecast of the first net increase in worldwide poverty in more than 20 years.
The toll has been tough on people like Indonesian Adi Muhammad Fachrezi, who was first in his family to go to college in 2014.
Showing tourists around Java’s towering volcanoes and white beaches earned him 20 million rupiah (RM5,600) a month and covered tuition and board. But that income dried up as the virus kept tourists away and he has had to put his studies on hold.
“I’m kind of ruined financially now, ” said Fachrezi, 24.
The magnitude of the economic free fall in South-East Asia’s five biggest economies was severe in the second quarter.
Indonesia shrank 5.3% year-on-year, Malaysia 17.1%, Philippines 16.5%, Singapore 13.3% and Thailand 12.2%, data compiled by Bloomberg showed. — Bloomberg
