Learn how the World Bank Group is helping countries with COVID-19 (coronavirus). Find Out

Overview

  • Developing economies in East Asia and the Pacific (EAP), already struggling with international trade tensions and COVID-19 (coronavirus), now face the prospects of a global financial shock and recession as the pandemic hit major economies around the world.

    This represents an unusual combination of disruptive and mutually reinforcing events. Significant economic pain seems unavoidable in all countries. In a rapidly changing environment, making precise growth projections is unusually difficult. Therefore, meaningful projections would constitute both a baseline and a lower-case scenario.

    Growth in developing EAP* is projected to slow to 2.1% in the baseline and to a negative 0.5% in the lower-case scenario in 2020, from an estimated 5.8% in 2019. Growth in China is projected to decline to 2.3% in the baseline and 0.1% in the lower-case scenario in 2020, from 6.1% in 2019.

    Growth in the region excluding China is projected to slow from 4.7% in 2019 to 1.3% in the baseline scenario and negative 2.9% in the lower-case scenario in 2020, and is projected to rebound gradually in 2021 as the effects of the virus dissipate.

    The COVID-19 shock will also have a serious impact on poverty reduction across the region, with an estimated 24 million fewer people escaping poverty in 2020 than would have in the absence of the pandemic (using a poverty line of US$5.50/day). If the economic situation were to deteriorate further, then poverty is estimated to increase by about 11 million people.

    This stands in contrast to the trend over the past two decades, which have seen poverty decrease dramatically across most of developing East Asia. The rapid growth in labor incomes among the poor, along with low unemployment, public transfers (such as pensions, cash transfers, and unemployment insurance, among others), structural transformations, and public investments contributed to the decline.

    Other challenges remain. Rapid urbanization and business demands are feeding a massive need for investment in infrastructure across the region, such as electricity access, adequate sanitation, and broadband infrastructure and connectivity. Fragility and conflict are also intensifying in some countries.

    East Asia and the Pacific is the epicenter of the double burden of stunting and obesity—both forms of malnutrition. Stunting significantly reduces the physical and mental capabilities of children, imposing enormous human and economic costs. In Indonesia, for example, where 30.8% of children are stunted, economic losses associated with stunting are estimated at 2-3% of GDP. Rates of overweight/obesity among women are alarming in some countries, ranging between 40% and more than 80%.

    The region includes 13 of the 30 countries that are most vulnerable to climate change. It also bears the brunt of 70% of the world’s natural disasters, which have affected more than 1.6 billion people in the region since 2000. Pacific Island countries, where rising sea levels are threatening coastal areas and atoll islands, have been hit hard by disasters exacerbated by climate change, including Category Five Tropcial Cyclone Harold, which left a path of destruction across Fiji, Tonga, Solomon Islands, and Vanuatu in April 2020.

    East Asia and the Pacific is also the largest contributor to greenhouse gas emissions, accounting for one-third of the world’s carbon dioxide emissions and 60% of its coal consumption. Curbing emissions in the region is critical to advancing the global climate change agenda. The World Bank is working with governments, the private sector, and other development partners on a range of innovative solutions to support greener and cleaner energy policies.

    *Based on country-level data available as of March 27, 2020.

    Last Updated: Apr 16, 2020

  • The World Bank’s strategy in the region focuses on three priority areas:

    Promoting private sector-led growth: Expanding private sector opportunities and creating an enabling environment for investment and innovation are crucial to ensuring sustainable growth in the region. For instance, in Malaysia, where new technologies play a large role in ongoing development, the Bank conducted a diagnostic study to unlock the potential of the digital economy. The report has guided government action in the sector, leading to expanded, cheaper, and faster internet access.

    In Fiji, the World Bank Group supported the issuance of the first sovereign green bond by a developing country, which raised US$50 million to support climate change mitigation and adaptation. For investors, green bonds are an attractive investment proposition, as well as an opportunity to support environmentally sound projects. At the request of Fiji’s Reserve Bank, the World Bank and the International Finance Corporation (IFC), the private sector arm of the World Bank Group provided technical assistance throughout the bond development process.

    Enhancing resilience and sustainability:  In a region highly vulnerable to the effects of climate change, the Bank works with countries and partners to enhance resilience, reduce greenhouse gas emissions, and support clean energy. For example, in Lao PDR, the Bank is supporting reconstruction and improving resilience to natural disasters. The Lao PDR Southeast Asia Disaster Risk Management Project is helping reduce the impact of flooding in Oudomxay province, while enhancing monitoring, forecasting, and early warning of natural disasters. The project is also improving financial resilience to natural hazards through insurance mechanisms and a national disaster risk financing strategy. In addition, a roads sector project in Lao PDR incorporates climate resilience into road maintenance. The World Bank’s International Development Association (IDA) Crisis Response Window is expected to provide funding to both projects to boost the country’s recovery from costly floods and build resilient infrastructure against future disasters.

    In China, the Hebei Air Pollution Prevention and Control Program (2016-2019) supported the province’s efforts to reduce air pollution by implementing a combination of targeted measures including a continuous emission monitoring system, replacement of heavily polluting diesel buses with electric vehicles, and a switch from coal-fueled cookstoves to clean gas stoves.

    Building human capital and inclusion: Investing in human capital is key to ensuring long-term sustainable growth and reducing poverty in the region. In Indonesia, the Bank is helping to strengthen social protection systems to address gaps in safety nets and build human capital. In Indonesia, the country’s conditional cash transfer (CCT) Program Keluarga Harapan (PKH) has contributed to a reduction in childhood stunting rates, school dropouts, and child labor among participants. Building on these strong results, additional funding from the World Bank in 2017 supported the government’s expansion of PKH to cover 10 million households, or 15% of the population, making it the second largest CCT program in the world. The program further supported efforts to strengthen PKH delivery systems and coordination with other programs. Additional financing for the program has expanded the scope to focus on economic empowerment of the poor and vulnerable as well as strengthening Indonesia’s social registry.

    A similar CCT program in the Philippines, locally known as the Pantawid Pamilya Pilipino Program, covers over 4 million households with children under 18, providing incentives for parents to invest in their health and education. The program has increased school attendance and reduced the gender gap in enrollment. The program’s success accounted for a quarter of the country’s total poverty reduction over the past seven years

    The World Bank approved US$5.3 billion for 49 operations in the region in fiscal year 2019, including US$4.0 billion in International Bank for Reconstruction and Development (IBRD) loans and US$1.3 billion in IDA commitments. The Bank also signed Reimbursable Advisory Services agreements – customized advisory services paid for by requesting clients – with four countries for a total of about US$5 million. 

    Last Updated: Apr 16, 2020

  • Health and Education

    In Indonesia, the World Bank supports the government’s Family Hope Program, which strives to end the cycle of poverty among the poorest. Family development sessions and learning materials are also provided to beneficiary mothers so that they can gain a better understanding of health and nutrition, good parenting practices, child protection, and financial management. In 2017, the program assisted 3.5 million families in improving their children’s education and health as shown by several impact evaluations. Since then, the government has expanded the program significantly in both coverage and benefit levels; in 2020, the program reached 10 million poor and vulnerable families.

    The Improving Primary Education Outcomes for the Most Vulnerable Children in Rural Mongolia Project, funded by the Japan Social Development Fund, introduced a home-based school preparation program for herders’ children living in remote rural areas. The level of school readiness of the children enrolled in the program has been significantly higher than of those enrolled in other alternative preschool education programs. In addition, mobile toy and book libraries have been established in 30 soums (districts), giving parents the opportunity to borrow and use high-quality education materials with their children at home. Extracurricular after-school programs, developed under the project, are helping primary grade rural children better adapt to school and dormitory environments. Overall, more than 7,500 children between 5-10 years, 15,000 parents, as well as 500 teachers and soum officials have benefitted from the project.

    In Myanmar, the Decentralizing Funding to Schools (DFSP) project has reduced the burden of fees for the parents and guardians of more than 9 million students through direct funding to all Ministry of Education schools for their operations, and has provided stipends to more than 200,000 poor and disadvantaged students, helping them stay enrolled through middle and high school. Building on the DFSP, the Inclusive Access and Quality Education (IAQE) project takes a national and a focused approach to cover all states and regions. The project supports programs that reach out to schools across the country, while placing a greater emphasis on social inclusion and support for conflict-affected areas. More than 70% of the financing will be channeled to Myanmar’s most disadvantaged townships, with a particular focus on their most under-performing schools and teachers.

    Social Protection and Jobs

    Since 2010, Papua New Guinea’s Urban Youth Employment Project has helped the country respond to an increasingly pressing socioeconomic situation, where more than half the population under age 24 had limited job prospects. In Port Moresby, it engaged 18,500 youth in training and work placement activities, established about 18,000 new bank accounts, and created about 815,000 days of work. Before the program, 70% of participants reported they never had a waged job, 33% never attended high school, 35% were involved in crime, and 74% never had a bank account. Six months after their on-the-job training, nearly half (41%) of the participants reported that they had secured full-time or part-time work, while employers reported that 97% of project participants were qualified for fulltime work. Co-financed by Australia’s Department of Foreign Affairs and Trade, the project is now the country’s most significant public program addressing youth unemployment. Its full-service approach—taking long-term unemployed youth through vocational training, job matching, and fully subsidized work placements—will now be expanded to include Lae, Papua New Guinea’s second-largest city and industrial hub.

    Infrastructure 

    In the Pacific, the World Bank has been supporting governments of the Pacific region since 2011 to increase the affordability, reliability and quality of information and communication and technology (ICT) access, through the Pacific Regional Connectivity Program (PRCP). The first phase in Tonga has delivered significant benefits for more than 101,000 people – close to the entire population of the Pacific Island kingdom. The project has reduced the average retail cost of broadband internet by 97%, reduced the average per-minute cost of international phone calls by 37%, delivered significantly lower wholesale broadband prices, through assistance on the development of stronger legislation, and constructed a 1,217-kilometer network of submarine fiber-optic cables, connecting Tonga and Fiji, and Tonga’s main island of Tongatapu to Ha’apai and Vava’u.

    Conflict and Fragility

    In the Philippines, the Mindanao Trust Fund-Reconstruction and Development Program is helping conflict-affected areas by supporting better governance, access to services, jobs creation and improved citizen security and justice. Communities have gained access roads, bridges, water supply systems, as well as farm equipment and post-harvest facilities. The program has also promoted social cohesion for around 650,000 people in Mindanao – 53% of whom are women – since 2006. As of early 2017, 314 conflict-affected communities across Mindanao have benefited from 577 community infrastructure, livelihood and functional literacy projects.

    Water and Sanitation

    In Indonesia, the PAMSIMAS (Penyediaan Air Minum dan Sanitasi Berbasis Masyarakat or Community Based Drinking Water Supply and Sanitation) program has helped Indonesia’s low-income rural and peri-urban population, spread across almost 23,000 villages, by providing improved water supply to 17.2 million people, and access to better sanitation facilities for 15.4 million people.

    In Vietnam, the Coastal Cities Environmental Sanitation Project provided drainage, wastewater collection and treatment plants, and solid waste management facilities for citizens in Dong Hoi, Quy Nhon and Nha Trang. It has reduced the incidence and severity of flooding for 255,000 people; provided solid waste collection and better access to improved sanitation for more than 800,000 people; provided better sanitation in schools for 66,500 students; and helped 8,400 poor families upgrade their toilets and sanitation connections. In Nha Trang City, the project has contributed to attracting more than six million tourists in 2019, significantly boosting the city’s prosperity.

    Innovations in Development

    In Mongolia, all 21 aimags (provinces) are covered by the groundbreaking Index-Based Livestock Insurance Project. The project introduced an insurance scheme where payments are based on the total number of livestock lost by species and soum (district) rather than on households’ actual, individual losses. The program is a combination of self-insurance, market-based insurance, and social safety net. Under the traditional system, it was difficult for insurers to verify losses by individual herders in Mongolia’s vast territory. Because the index system relies on verifiable statistics, estimating losses is a much simpler process that leaves less room for error. This innovative product benefits herders and makes good business sense for insurance companies.

    Last Updated: Apr 16, 2020

  • The World Bank Group continues to build partnerships with the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), the Pacific Island Forum, Asian Development Bank (ADB), the Australian Department of Foreign Affairs and Trade (DFAT), the Japan International Cooperation Agency (JICA), New Zealand’s Ministry of Foreign Affairs and Trade (MFAT), and others to maximize development impact.

    The Bank Group is also working closely with new development banks, such as the Asian Infrastructure Investment Bank (AIIB) to end poverty and boost shared prosperity, having approved several projects with the AIIB around the world.

    A key priority for the World Bank’s work in the region is to strengthen knowledge partnerships to deliver solutions for its clients.

    The Bank’s expanded partnerships with non-borrower member countries in recent years has continued in our Malaysia, Korea, and Singapore offices, which generate and share development knowledge, lessons, and solutions with countries in the region and across the globe.

    Last Updated: Apr 16, 2020

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