Overview

  • Growth in the developing economies of East Asia and the Pacific (EAP) is projected to decelerate in the near term. Regional growth is projected to decline from 6.3 percent in 2018 to 5.8 percent in 2019 and to 5.7 and 5.6 percent in 2020 and 2021, respectively. In China, heightened trade tensions with the United States have accelerated the moderation in growth already underway as the government focuses on rebalancing the economy towards consumption.

    Growth in the region’s other large economies has also moderated and the recovery in manufacturing observed at the beginning of the year proved to be short-lived. Weakening external demand combined with global trade policy uncertainty have been weighing on regional activity through declining exports, deteriorating business confidence, and weakening investment.

    Growth in the region’s smaller economies ticked up in the first half of 2019, reflecting robust growth in the tourism, real estate, and extractive sectors.

    The region has made significant strides in eliminating extreme poverty, but as growth moderates, the pace of poverty reduction is also slowing. The percentage of people living on less than $1.90 a day is now estimated at less than 1.5 percent (3.8 percent excluding China). This number is expected to reach 1 percent by 2021 (2.7 percent excluding China). Nonetheless, an aging population, rapid urbanization, slowing growth in global trade, and rapidly advancing technologies present new challenges to sustainable progress in the region.

    Over the past two decades, poverty has decreased dramatically across most of developing East Asia. Between 1990 and 2013, the number of people in the region living in extreme poverty fell by over 920 million. 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.

    Nevertheless, challenges remain. While poverty continues to decline, over a quarter of the region’s population remains economically insecure, and inequality is perceived to be high and rising in many countries. Rapid urbanization and business demands are feeding a massive need for infrastructure investment in the region, where 130 million lack access to power, 600 million lack access to adequate sanitation, and broadband infrastructure and connectivity are lagging. Fragility and conflict are also intensifying in some countries.

    East Asia and Pacific is the epicenter of the double burden of stunting and obesity—both forms of malnutrition. Indonesia, Myanmar, the Philippines, and Vietnam are among a group of 34 countries accounting for 90% of the global burden of stunting, while China and Indonesia are among the 10 countries that account for more than 50% of the global burden of obesity. Stunting significantly reduces the physical and mental capabilities of children, imposing enormous human and economic costs. In Indonesia, for example, where 37% of children are stunted, economic losses associated with stunting are estimated at 2-3% of GDP.

    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. The Pacific Island countries, where the rising sea level is threatening coastal areas and atoll islands, have been hit hard.

    East Asia and 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. The region plays a critical role in 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, including carbon pricing.

    Last Updated: Oct 11, 2019

  • The 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. 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 $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 IFC 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. 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 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, a Bank-supported program is helping Hua Xia Bank provide businesses with over $900 million in financing to increase energy efficiency, invest in clean energy, and tighten air pollution control. The project focuses on the Beijing-Tianjin-Hebei (Jing-Jin-Ji) region and the surrounding provinces of Shandong, Shanxi, Inner Mongolia, and Henan. The funding is also helping combat climate change by so far reducing carbon emissions by 1.8 million tons per year.

    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. The conditional cash transfer (CCT) project Program Keluarga Harapan (PKH) has contributed to a reduction in childhood stunting rates, school dropouts, and child labor among participants. Building on its strong results, additional funding from a 2017 Program for Results expanded PKH to cover 10 million households or 17 percent of the population, making it the second-largest CCT program in the world and further helping it expand coverage, strengthen delivery systems, and improve coordination.

    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 $5.3 billion for 49 operations in the region in fiscal 2019, including $4.0 billion in IBRD loans and $1.3 billion in IDA commitments. We also signed Reimbursable Advisory Services agreements with four countries for a total of about $5 million. Our regional strategy focuses on three main areas: private sector– led growth, resilience and sustainability, and human capital and inclusion.

    Last Updated: Oct 11, 2019

  • 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 give mothers have a better understanding of health and nutrition, good parenting practices, child protection, and financial management. The program is currently assisting 3.5 million families to improve their children’s education and health, and the government plans to expand the program to reach 6 million families in 2017.

    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 percent of participants reported they never had a waged job, 33 percent never attended high school, 35 percent were involved in crime, and 74 percent never had a bank account. Six months after their on-the-job training, nearly half (41 percent) of the participants reported that they had secured full-time or part-time work, while employers reported that 97 percent 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 City, Papua New Guinea’s 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 percent, reduced the average per-minute cost of international phone calls by 37 percent, 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 & 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.

    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: Oct 11, 2019

  • The 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), 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: Sep 20, 2018

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