Poverty Beyond Crisis

The financial market crashes. The wealthy suffer. A financial crisis follows, and with a lag, the real sector is attacked. Demand tumbles. Employment opportunities fall. Lower and middle income classes feel the impact. At least, they have to change their lifestyles, but some become poor or near poor. The already-poor suffer much more. Governments in the affected countries, international organizations, and other interested parties discuss seriously the causes of the crisis and examine various policies to exit from the crisis.

This is what happens during a crisis, including the recent 2008–09 global crisis. The 1930's Great Depression, the 1997–98 Asian crisis, and the recent global recession were preceded by strong economic growth, optimism, and, especially recently, the dramatic rise in the contribution of the financial sector to the region's gross domestic product (GDP). All were triggered by a financial crisis. It initially hit selected employment, particularly those working in financial sectors, which were mostly in the middle and upper income groups. Then it spread to real sectors, affecting a wider set of jobs including lower income groups and the poor. It would appear that almost nobody can hide.

Moreover, the poor have and will have suffered the most, with food as the most important item in the expenditure of the poor. Whatever happens to food significantly affects the welfare of the poor. In Chapter 4 Thant describes how the poor people of Laos have been affected by the global crisis. They have been successful in reducing poverty, but their recent global exposure may have temporarily reduced the success in poverty reduction. Learning from what happened in the 1997–98 crisis, Boonyamanond and Punpuing show in Chapter 12 how the Thai economic miracle was eroded drastically by the 1997–98 crisis.

In all crises, the non-poor also suffered. Some became poor, some were still above the poverty line, and some even remained rich, but their wealth had been much reduced, resulting in a feeling of insecurity. These people are usually the groups of people who have stronger political voices and hence their relative suffering may be heard more strongly in both domestic and international circles.