Kuala Lumpur, 15 January - Policy makers should embed investment, employment and economic security policies in national development strategies, in order to move ahead of the current global financial and economic crisis and to ensure delivery on important development targets such as poverty reduction, a senior UN official said on Thursday (15 Jan).

Dr. K.S. Jomo, United Nations (UN) Assistant Secretary General for Economic Development in the Department of Economic and Social Affairs (DESA) who currently sits on the Commission of Experts on International Monetary and Financial System Reform, was speaking at a public lecture hosted by the UN in Malaysia and the Institute of Strategic and International Studies (ISIS) in Kuala Lumpur.

In his lecture, Dr. Jomo said while emerging markets in Asia had plunged by about fifty percent on average, which had a negative impact on average household income and wealth, the financial positions of many developing countries were in much better shape than during the previous financial crises in Asia and Latin America, due to strong foreign reserves and better fiscal balances.

"2009 will see a 10% drop in foreign direct investment, and a marked slowdown in export growth, especially in Asia. This in turn will result in a significant slowdown in industrial production. Slower growth will also undermine progress in fighting poverty and achieving the Millennium Development Goals (MDGs)," Dr. Jomo said.

Dr. Jomo highlighted several policy priorities for countries in the region, home to the majority of world's poorest, including reflating the economy, fiscal and monetary measures aimed at spurring domestic demand and limiting the spread of the crisis across borders and to the real economy.

"To offset weakening foreign demand and contracted export earnings, public spending targeted at infrastructure, alternative energy, health and education is key to stimulating the domestic economy. At the same time, governments should look at investment and technology policies that can help to diversify the economy which is crucial for long-term development."

Dr. Jomo suggested that while the world was bracing for an unavoidable immediate global downturn, decisions made by policy makers at national, regional and international levels today would be decisive in determining the length and severity of the present recession.

"Developing countries must take steps today to ensure prudent financial regulation and capital account management techniques that can stem undesirable and excessive capital inflows and to avoid sudden, disruptive large outflows. Equally as important, affordable financing channelled toward productive long-term investments, for example through development banks, is essential."

Pointing to neglected global imbalances, overzealous financial liberalisation and a failure of the Bretton Woods institutions and rich countries in providing leadership as root causes of the financial crisis, Dr. Jomo said that there was a need for greater inclusiveness, balance, and cooperation in reshaping the international financial architecture.

"While these are difficult times for all, the current crisis provides a window of opportunity to lock in reforms to the international financial system and to invest in strategies for sustainable and equitable growth."

The lecture, titled, "The Global Financial Crisis and the Economic Slowdown: Implications for S.E. Asia and the United Nations Response" was attended by over two hundred guests from the foreign missions, government, business, and civil society.