By Prime Sarmiento

    MANILA, March 9 (Xinhua) -- South Asian economies will remain resilient as steady domestic consumption will mitigate the impact of the global recession, but such resiliency won't guarantee the governments in the region can solve one of its biggest problems --high poverty incidence, analysts said.

    Increased public spending and the expected bumper crop will spur spending among South Asian consumers, according to experts who convened in Monday's economic forum organized by the Asian Development Bank.

    "South Asia has seven countries and the crisis will affect each country in varying degrees," said Ashok Sharma, director for ADB's South Asian financial, public management and trade division. But the ADB doesn't see South Asia to go into recession this year. The ADB expects a slower growth rate in South Asian economies in 2009 as their export industries, tourism sector and migrant workers are vulnerable to the meltdown.

    South Asian region is composed of India, Pakistan, Sri Lanka, Bangladesh, Bhutan, Nepal and the Maldives. India is home to the world's biggest business processing industry. Bangladesh is a heavy exporter of footwear and garments, while Sri Lanka relies onits tea exports and tourism industry. The region also depends on remittances as it's among the world's biggest source of construction workers, nurses and programmers.

    The biggest markets for these export products and labor are several industrialized economies including the United States, Japan and Western Europe. But most developed economies fell into recession, reduced demand and affected export growth in developing economies, especially in Asia.

    Despite a global slowdown, the ADB forecasts an average 6.7 percent growth for South Asia in 2009. South Asia expanded by 7.1 percent in 2008 as South Asian growth is not entirely dependent on the export sector, but driven more by domestic demand.

    Sharma said fiscal stimulus packages which will provide emergency employment to most of the workers and helped boost spending in consumption-driven South Asian economies. A study commissioned by the ADB and issued Monday said South Asian economic planners have imposed short-term measures -- including monetary easing and increased government spending -- to cushion the impact.

    The most resilient South Asian economy is India, according to Manu Bhaskaran, the study's author and chief executive officer of the Singapore-based consultancy firm Centennial Asia Advisors. Next only to China, India is the second fastest growing economy inthe world and expanded by eight to nine percent in the past few years. India's gross domestic product (GDP) is forecast to slow this year at seven percent.

    The growing agriculture sector -- which employs 60 percent of the country's labor force -- will boost spending and consumption, Bhaskaran said in an interview with Xinhua.

    The government's initiative to increase the salaries of its estimated 4.5 million central government employees, will likewise boost spending. The Reserve Bank of India's high capital ratio also keeps its banking industry secure.

    But in his study, Bhaskaran said that there's still room for interest rate reductions especially in India and Sri Lanka. He adds that governments could consider incentives to encourage overseas workers to remit money home, such as special savings instruments, and they should also discuss currency swap arrangements and other measures to keep their financial systems stable.

    There's also a need for South Asian countries to reduce their fiscal deficits, diversify their economies, step up infrastructure investment and boost intra-regional trade, Bhaskaran said, which are expected to step up the economies' resilience.

    Such resilience, however, won't guarantee that the governments in South Asian region can solve one of its biggest problems -- high poverty incidence.

    "While some countries in South Asia have had relatively less exposure to the crisis from the adverse impacts of capital flows, more than half of the 900 million people in developing Asia who survive on 1.25 U.S. dollars a day, live in the subregion, so any tempering of growth is a serious cause for concern," ADB President Haruhiko Kuroda said in a speech delivered at the opening of the two-day forum.

    Kuroda said the fiscal stimulus packages must also aim to protect most of the region's poor through "public spending that creates jobs while preserving macroeconomic stability."

    The ADB will be increasing its current fund of 12 billion dollars "by several billions" to assist developing member countries, he added.