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By Likha Cuevas-Miel, Reporter
The Asian Development Bank (ADB) warned that protectionism to stave
off recession or economic collapse as a result of the global
financial crisis would be “a recipe for disaster” for many parts
of the world, especially in Asia.
“[That is] the worst thing that you can do.
Going back to protectionism is a recipe for disaster,” Rajat Nag,
the ADB managing director-general, told reporters on the sidelines
of the recently concluded seventh Management Association of the
Philippines (MAP) International CEO Conference.
Talks of protectionism are floating in countries
badly hit by the global financial crisis as calls for securing jobs
at home from cheaper labor abroad have become louder.
William Pesek Jr., Bloomberg News Asia-Pacific
columnist and another conference speaker, said there are
“disturbing signs” that protectionism may be on the table. He
added that there already are calls to renegotiate the North American
Free Trade Agreement in the US.
Nag said erecting walls would create more
problems for a country that would be much worse than the onslaught
of cheaper imported goods.
“Not only could it [protectionism] cause
prices to go up because domestic prices are higher but it ultimately
leads to job losses,” he added. “This is the time not to talk
about protectionism but the total opposite of that [which is] the
speedier conclusion of WTO [World Trade Organization] global
rounds,” Nag said.
In the meantime, countries or regional blocs are
seen to sign more free trade agreements to secure growth on top of
recent similar agreements between the Association of Southeast Asian
Nations and China and the Asean and India.
Options for RP
If protectionism creeps in, the Philippines,
according to a Filipino economist, must turn to its neighbors, and
the new emerging major economies, such as China, India, Japan and
South Korea, for trade.
“We will have to be more reliant on the
region. China, for example, has to shift its sights from domestic
spending to support growth,” Victor Abola of the University of
Asia and the Pacific (UA&P), told The Manila Times.
Abola said China could afford to spend for pump
priming, since it does not have any deficit and its economy is
export-driven.
“This [leeway] is probably appropriate for
countries in the early stage of development” but Chinese domestic
demand has to increase beyond the current 35 percent for China to be
able to help other Asian countries, ADB’s Nag said.
Such domestic demand, he added, is low for any
post-war major economy.
ADB sees that Asia will experience a “healthy
clip” in its growth from 9 percent to 7.5 percent by year-end and
in 2009 it will be at 7.2 percent.
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