Former UNCTAD SG says Rising income disparities worrying
by Paneetha Ameresekere
Rising income disparities are more worrying to the UN than 'climate change,' former UN Conference for Trade & Development (UNCTAD) Secretary General (SG) and former Thai Deputy Premier Dr. Supachai Panitchpakdi said speaking at a function in Colombo yesterday.
He said that the effect of this was that those who invest in real estate, bonds and equities, find their income levels rising faster.
This is what led to the Arab Spring, Wall Street Protest and the rise in nationalism in France, which previously was able to garner 1-2 per cent of the vote, but which has since increased to 10 per cent, said Panitchpakdi.
The UN's objective is to uplift the incomes of 40 per cent of the world's population who earn the lowest of incomes. The UN believes that their income levels should increase faster than per capita GDP levels, the former UNCTAD SG said.
He said that one of the means to resolve this income disparity issue is by uplifting primary industries. Panitchpakdi said that much of Asia's economy, be it agriculture, fishery or the canning industry, runs as primary industries.
The former UNCTAD Secretary General said that he was happy that Sri Lanka's Primary Industries Ministry had recently signed an MoU with a Thai agro bank, known to give loans to poor Thai farmers, but were yet benefited by a low non performing loan (NPL) ratio compared to Thai commercial banks.
He further said that after the global financial crisis of 2008, global growth has become anaemic. International trade which had previously grown at the high 6-7 per cent levels has since slowed down to the 1-2 per cent levels.
The former UNCTAD SG said that Thailand itself was suffering from negative or low inflationary rates of between 1-2 per cent. So producers have no better pricing. And consumers are putting back their purchases hoping that prices will fall some more.
With the advent of shale oil in North America oil is hovering at the US40 per barrel price level. This has affected other commodity exporting nations, such as gold and copper, because such prices are linked to the movement of oil.
Japan is suffering from low inflation and the Japanese Government is pumping in money. Likewise in Europe inflation is under 1 per cent and the European Central Bank is indulging in quantitative easing. USA, though enjoying full employment is yet suffering from low inflation.
Therefore, there was a need to strike a balance between external demand and the domestic market. Panitchpakdi,however, said that there was a problem because Asia, though it has high savings levels its consumption levels were at the low 10-20 per cent GDP levels, whereas in the USA it was as high as 50 per cent of GDP. The forum was organized by the Sri Lanka Retailers' Association.
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