economies did well in 2002
weakening of the global economy in 2002, developing economies in
the Asia-Pacific region performed surprisingly well, achieving growth
of around 5 per cent during the year, says ESCAP's Economic and
Social Survey of Asia and the Pacific for 2003.
which was 2 percentage points higher than the 2001 rate, owed much
to surging intra-regional trade, fiscal stimulus and monetary easing,
noted the report released in Colombo last week but in Asia on April
Here are the
highlights of the report:
for 2003 are conditioned by the intensity and duration of military
action in Iraq and its negative ripple effects, including those
on energy prices. The region imports 40 per cent of its energy requirements.
also depend to a considerable extent on the sustainability of enhanced
intra-regional trade and a supportive domestic policy stance. With
the latter there are risks as fiscal stimulus cannot continue for
too long as it can lead to an unsustainable increase in public debt.
in the region is still several percentage points below the pre-1997
crisis level. This translates into fewer job opportunities and puts
greater pressure on government budgets, including allocations for
*Given the absence of any evidence of a strong pickup in the
global economy, at least in the first half of 2003, the war in Iraq
and other geopolitical uncertainties, sustaining growth in the region
will depend primarily upon domestic policies.
stimulus measures have relied on a mixture of fiscal and monetary
policies. However, with levels of public debt exceeding 50 per cent
of GDP in most economies of the region the question of fiscal consolidation
has to be tackled in earnest before too long. In the case of monetary
policy also, as a result of falling inflation, interest rates have
reached quite low levels so that the scope for further reduction
is limited in most countries.
* The programmes
of reform of the corporate and financial sectors must continue to
be implemented with renewed vigour to enhance investor confidence.
It is worth noting that levels of investment in the private sector
are still below pre-1997 levels in South-East Asia. Without a pickup
in private investment, medium-term growth is likely to be jeopardized.
* As emphasized
in the past, countries dependent upon official development assistance
(ODA) need to redouble their efforts to improve the utilization
of external assistance by drawing up realistic projects for such
funding and improving their aid management structures.
* One of the
central challenges of globalization is that countries have to compete
for markets. Governments must strive to provide an appropriate macro-economic
environment, realistic exchange rates and improvements in the physical
infrastructure to enable firms to compete, and the firms themselves
must promote innovation, improve product and service quality and
become more receptive to change.
* The momentum
of trade liberalization, including action in trade facilitation,
should be maintained. It is widely accepted that regional trading
arrangements can be a useful complement to the multilateral trading
system and enhance its effectiveness. Nevertheless, the recent increase
in bilateral trade agreements in the region should not serve to
reduce the commitment of Governments to promote the multilateral
objectives of the Doha Development Agenda.
* The current
weaknesses in the global economy and concerns with security issues
such as terrorism and the use of the international financial system
by terrorists require significantly enhanced cooperation at the
regional level in the exchange of information, intelligence and
policy-making in the area of security.
* With regard
to longer-term issues, the positive impact of education and health
care on the well-being of individuals and development of societies
is enormous. While the public sector is still a major provider of
education and health care, additional resources need to be raised
using multiple channels, including the public and private sectors,
communities, non-governmental organizations, bilateral donors and
multilateral organizations. Moreover, the effective and efficient
utilization of resources is also important to achieve better results
in the provision of health and education.
* The achievement
of faster economic growth is often accompanied by environmental
degradation. This affects the poor adversely and disproportionately.
An analysis of the linkages between the environment and poverty
and the policies adopted by the Asian and Pacific countries to mitigate
their adverse impacts yields important policy conclusions. Governments
have to stress the building of awareness and promoting stakeholder
ownership, decentralization and the maintenance of good governance
for increasing the effectiveness of those environmental policies.
a) The most obvious and serious risk is what happens in the aftermath
of military action in Iraq. While the war in Iraq appears to be
coming to an end and its impact on Iraq's oil industry minimal,
its political and security impact on the Middle-East could be more
long-lasting. The global economy, too, has been adversely affected
by the uncertainty leading up to the war. This is unlikely to be
reversed immediately upon the ending of hostilities. Indeed, growth
prospects in the developed economies are presently weaker than in
b) Impact of
SARS on the region
Too early to
predict its eventual impact with precision. For now, SARS has still
to peak; its impact could very well extend beyond Q2 of 2003.
will be on tourism and travel and thus on hotels, restaurants and
retailing. If SARS becomes long-lasting its impact will then extend
beyond these sectors into actual production declines and job losses
in sectors other than travel and hotels.
At the moment
most private sector forecasts are predicting an overall output loss
of between 0.5 and 1.0 percentage points for the region. This will
be mainly concentrated in Hong Kong, China, Singapore and Thailand,
the economies with large tourism sectors, and to a smaller extent
in Indonesia and Malaysia. Its impact on China itself is considered
to be marginal at this stage.
If the spread
of the disease is contained by June 2003 there, however, exists
the possibility of a significant bounce-back in Q3 & Q4 of 2003
in the regional economy. Such has been the pattern of revival following
a major external shock. The effects of shocks wear off eventually
and consumers tend to spend more than what they might have done
otherwise. In that event the impact on output growth in 2003 could
be very small.
c) The faltering
momentum of growth in the US and EU - despite very low interest
rates - and the anaemic Japanese economy are likely to impact on
export growth from, and continue to undermine business confidence
in the region. The US, EU and Japan account for around one half
of exports from UNESCAP developing countries. In fact, because of
slow growth in the US, EU and Japan in 2003 the momentum of intra-regional
trade could also slow down as some of the within-region trade is
in items whose final destination is the developed countries.
On the plus
side, however, there are signs of renewed confidence in the world
stock markets but it is too early to say: a) whether this confidence
can be sustained or b) will translate itself into higher capital
expenditures by corporations.
quartet flies Emirates to Indonesia
service is not limited to the airline's human customers, a quartet
of four-legged passengers discovered recently.
A pair of leopards
and a pair of bears bred in captivity in Sri Lanka were flown into
a new home in Indonesia's Ragunan Zoo after a 3,300 km flight on
duo Sony and Raja aged six and nine years respectively, weighing
approximately 110 kilogrammes each and the three-year-old bears,
Tikiri and Chuti Kalu weighing approximately 65 kilogrammes each
were sent to the Ragunan Zoo as part of an exchange programme initiated
by the Dehiwala Zoo in association with the Presidential Secretariat
and the Sri Lanka Mission in Jakarta.
for the Dehiwala Zoo said that the exchange programme was initiated
to expand the range of species it accommodates.
are expected to be brought to Sri Lanka from Indonesia as part of
took on the delicate task of transporting the leopards and the bears
and adhering to the letter, instructions for their care en route.
maintaining a temperature of 25° to 30° centigrade and a
humidity level of 70 to 80.
Manager in Colombo, Damian Jayasuriya said: "It was the first
occasion the Colombo office handled a consignment which included
carnivorous animals, and we are very happy to report that everything
went to plan."
NDB sells major
stake in MLL
Development Bank (NDB) said last week it had sold a major portion
of its holding in Mercantile Leasing Limited (MLL) to a group of
well known investors.
with one of its subsidiaries owned 66% of the shares in MLL. After
the divestiture, NDB will retain 10% of the shares with the balance
being sold to National Savings Bank (NSB) (19.5%) and reputed businessman,
M.M. Udeshi (29%).
statements for the year ended 31st December 2002 reflected a remarkable
turnaround from the previous year in achieving a net profit of Rs.
47.4 million. Asoka Sirimanne, MLL's CEO welcoming the change in
ownership structure said "having NSB as a major shareholder
on top of NDB continuing to hold 10% of the shares will enhance
MLL's strength and credibility and make future growth that much
General Manager, NDB, explaining NDB's rationale for selling said
that as most people are aware, NDB is presently working towards
merging its business with the commercial banking business of NDB
Bank Ltd, subject to regulatory and shareholder approval.
matter of strategic focus, attention is being directed towards the
merger hence NDB's decision to decrease its holding in MLL,"
Tea boosts the
WASHINGTON - An ordinary cup of tea may be a powerful
infection fighter, a study suggests. Researchers report in the Proceedings
of the National Academy of Sciences that they have found in tea
a chemical that boosts the body's defence fivefold against disease.
They said the
chemical primes immune system cells to attack bacteria, viruses
and fungi and could, perhaps, be turned into a disease-fighting
Dr. Jack F.
Bukowski of Brigham and Women's Hospital in Boston and Harvard Medical
School said (last week) that he and his co-authors isolated the
chemical in the laboratory and then proved with a group of volunteers
that it did protect against germs.
out the molecular aspects of this tea component in the test tube
and then tested it on a small number of people to see if it actually
worked in human beings," said Bukowski. The results, he said,
gave clear proof that five cups of tea a day sharpened the body's
defences against disease.
a nutrition specialist at Pennsylvania State University, said Bukowski's
study adds to a growing body of evidence that tea is an effective
is potentially a very significant finding," she said. "We're
seeing multiple benefits from tea."
But she said
the work needs to be confirmed in a much larger study, involving
In the study,
Bukowski and his co-authors isolated from ordinary black tea a substance
called L-theanine. He said the substance is found in green and oolong
tea, which also are processed from traditional tea tree leaves.
L-theanine is broken down in the liver to ethylamine, a molecule
that primes the response of an immune blood cell called the gamma-delta
from other studies that these gamma-delta T cells in the blood are
the first line of defence against many types of bacteria, viral,
fungal and parasitic infections," he said. "They even
have some anti-tumour activity."
The T cells
prompt the secretion of interferon, a key part of the body's chemical
defence against infection, Bukowski said.
from mouse studies that if you boost this part of the immune system
it can protect against infection," he said.
test the finding, the researchers had 11 volunteers drink five cups
a day of tea, and 10 others drink coffee. Before the test began,
they drew blood samples from all 21 test subjects.
weeks, they took more blood from the tea drinkers and then exposed
that blood to the bacteria called E-coli. Bukowski said the immune
cells in the specimens secreted five times more interferon than
did blood cells from the same subjects before the weeks of tea drinking.
Blood tests and bacteria challenges showed there was no change in
the interferon levels of the coffee drinkers, he said.
Bukowski said it may be possible to further isolate and refine L-theanine
from tea and use that as a drug to boost the infection defence of
effects of tea have been extensively studied. It has been linked
to lower heart disease and cancer risk through the action of flavonoids,
a type of antioxidant. Other studies have linked tea to helping
combat osteoporosis, the brittle bone disease, and to relieving
some allergy symptoms.
slow due to red tape, uncertainty
private sector hasn't taken advantage of the peace process to invest
heavily in the economy largely due to administrative problems and
political uncertainty, a top economist said.
Weerakoon from the Institute of Policy Studies (IPS) said there
were constraints towards investment because too many line ministries
were involved in the implementation (and decision-making) process.
over the peace process had also slowed domestic and foreign investment.
She was speaking
at the Colombo launch of ESCAP's annual report on economic and social
trends last year and expectations for this year. The UN report was
released earlier in the rest of Asia on April 17.
it was too early to say how the Iraq war and SARS would impact on
Asian economies including Sri Lanka, noting, however, that tourism
was already affected by reduced tourist arrivals in many countries.
She said there
could be some benefit from the Iraqi situation if oil prices fall
as anticipated. "That could help Sri Lanka."