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Overview

  • CONTEXT

    The economies of East Asia and the Pacific began to bounce back after a severe economic shock in 2020, but recovery has been uneven.  Only China and Vietnam have followed a V-shape growth path with output surpassing pre-COVID-19 levels in 2020.  In the other major economies, output remained on average around 5% below pre-pandemic levels, with the smallest gap in Indonesia (2.2%) and the largest gap in the Philippines (8.4%).  Economic contraction has been particularly severe and persistent in some of the small island economies, with output in 2020 remaining more than 10% below pre-pandemic levels in Fiji, Palau, and Vanuatu. 

    China and Vietnam are projected to grow by 8.1% and 6.6% respectively in 2021, while the rest of the region, reflecting deeper crisis scars, is projected to grow by about 4.4%, according to Uneven Recovery, the World Bank’s April 2021 Economic Update for East Asia and the Pacific.  The recovery is expected to be particularly protracted in tourism-dependent Island economies, with growth projected to be negative in about half of the countries, despite having been largely spared by the pandemic. 

    Due to the economic distress, poverty in the region stopped declining for the first time in 20 years and 32 million people were prevented from escaping poverty.  Inequality increased because of the pandemic and the resulting shutdowns, as well as the unequal access to social support and digital technologies.   The depletion of physical and human capital is more dire among the poor.  In some countries, children of households in the bottom two-fifths of the distribution are 20 percentage points less likely to be engaged in learning than children of the top one-fifth.  

    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. In some countries, rates of overweight/obesity among women are alarming, 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 climate-induced disasters, including Category Five Tropical Cyclone Harold, which left a path of destruction across Fiji, Tonga, Solomon Islands, and Vanuatu in April 2020. Following that, in December 2020, the Category Five Tropical Cyclone Yasa made landfall in Fiji, which caused significant damage and the loss of four lives across two islands. 2021 has already seen two severe Tropical Cyclones in the Pacific.

    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. Guided by the World Bank Group’s new Climate Change Action Plan, 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 and to unlock the benefits of green, resilient and inclusive development.

    Last Updated: Apr 16, 2021

  • 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 improved 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 the capacity to monitor, forecast, and deliver early warning of natural disasters. The project is also improving financial resilience to natural disasters through insurance mechanisms and the development of a national disaster risk financing strategy. In addition, a roads sector project finances the incorporation of climate resilience in vulnerable and critical sections of the Lao road network, including the road asset management system and maintenance procedures. The World Bank’s International Development Association (IDA) Crisis Response Window is providing funding to both projects to boost the country’s recovery from costly floods and build resilient infrastructure against future floods in Luang Prabang, Borikhamxay, and Oudomxay provinces.

    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 address child stunting and gaps in safety nets to build human capital.

    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, the World Bank in 2017 supported the government’s expansion of PKH coverage from 6 million to 10 million families, 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. For example, a behavior change communications initiative called “Family Development Sessions” has expanded to help mothers gain a better understanding of health and nutrition, parenting practices, education, and household financial management. Additional financing of US$400 million for the program in 2020 has expanded the scope to include economic empowerment of the poor and vulnerable as well as strengthening Indonesia’s social registry. Most recently, the Bank supported the government’s COVID-19 response to poor households through US$98 million in additional financing for Indonesia's Social Assistance Reform Program for top-up of cash transfers to existing PKH beneficiaries under a new temporary emergency scheme.

    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$7.3 billion for 77 operations in the region in fiscal year 2020, including US$4.8 billion in International Bank for Reconstruction and Development (IBRD) loans and US$2.5 billion in IDA commitments. The Bank also signed Reimbursable Advisory Services agreements – customized advisory services and analytics paid for by noncommercial requesting clients – with three countries for a total of about US$4 million.

    Last Updated: Apr 16, 2021

  • COVID-19 Response

    The World Bank is delivering record levels of support to clients, making available up to US$160 billion over a 15-month period ending in June 2021, to protect the poor and vulnerable, support businesses, and bolster economic recovery.  In the East Asia and Pacific (EAP) region, emergency operations have been approved under the COVID-19 fast-track facility in a number of countries, including Cambodia, Mongolia, the Philippines, among others.  These operations provide emergency financing for the purchase of medical and laboratory supplies, training of medical staff, and strengthening national public health systems based on country needs.

    The World Bank is also working with countries to restructure existing projects to fight the COVID-19 pandemic by reallocating funds, triggering emergency components of existing projects, and activating Catastrophe Deferred Drawdown Options (CAT DDOs).

    In a second phase of the COVID-19 response, the Bank is working with countries to strengthen social protection measures for the poor and vulnerable, support businesses and safeguard jobs, and advance the reforms needed to shorten the time to recovery and build conditions for broad-based and sustainable growth.

    To provide relief for vulnerable populations, low- and middle-income countries need fair, broad, and fast access to effective and safe vaccines. That is why the World Bank is building on its initial COVID-19 response with US$12 billion to help countries purchase and distribute vaccines, tests, and treatments, including financing for Mongolia and the Philippines

    Health and Education

    The World Bank supports Vietnam’s efforts to provide quality, affordable health care services for all citizens. In the northern part of Vietnam, 13.7 million people—many of them from remote areas—have better access to quality health care. The Northeast and Red River Delta Regions Health System Support Project improved the treatment capacity of 74 public hospitals at the district and provincial levels by investing in upgrading the medical infrastructure and training health workers. Key interventions in five areas of cardiology, obstetrics/gynecology, pediatrics, oncology, and trauma (surgery) are now available at these hospitals, obviating the needs for patients to seek care at tertiary hospitals far away from home.

    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.

    Social Protection and Jobs

    In Solomon Islands, the Community Access and Urban Services Enhancement (CAUSE) project is improving basic infrastructure and services for vulnerable, urban populations in the country. The project prioritizes skills training, short-term job opportunities and income generation. Despite the constraints imposed by COVID-19, the project benefited about 11,000 households across three provinces by June 2020.  In the same period, 2,160 infrastructure and service delivery workers had been trained and 111,600 labor days created (of which 50% went to women and 44% to youth), with each participant working an average of 30 days.

    The project funds the creation of key community infrastructure such as bridges, roads, and waste disposal systems that require little maintenance, ensuring that future generations have secure access to basic services.

    The project’s results demonstrate that a grassroots-level, community-based work approach combined with training and work experience can generate immediate and visible results for the most vulnerable. It improves economic opportunities and benefits entire communities through a more development-oriented approach aimed at improving service delivery in urban areas. 

    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 Bank’s assistance has also extended to conflict-affected areas in the country, helping support better governance, access to services, jobs creation, and enhanced citizen security and justice. Supported by a range of development partners, the Mindanao Trust Fund (MTF) aims to improve prospects for peace and development in conflict-affected areas in Mindanao. The Reconstruction and Development Projects, Phase II and III (RDP/2 and RDP/3), funded by the MTF, have improved social and economic recovery, promoted social cohesion and participatory governance through a community driven development approach in conflict affected areas of the Bangsamoro Autonomous Region of Muslim Mindanao. A total of 30 community infrastructures, 45 livelihood skills trainings, and functional literacy classes in 15 conflict-affected communities were implemented. With these, nearly 30,000 people now benefit from clean water, better roads, more post-harvest facilities, and better access to farming and fishing equipment. The MTF’s implementation and design is in close coordination and collaboration with the regional ministries with the aim of mainstreaming the good practices of RDP/2 and RDP/3. Participation of Indigenous Peoples, women, persons with disabilities, and youth were targeted to ensure inclusion.

    In response to the COVID-19 pandemic, RDP/3 also supported the construction of health stations across six communities servicing around 13,000 individuals. These facilities provide communities in geographically isolated areas the necessary medical care and services such as isolation facilities, and in the longer term also birthing room, midwife station, small pharmacy and basic medical equipment.

    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 – with 84% of the water supply systems well managed and financed for cost recovery – 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. This project helps to prepare Vietnam as a clean and green destination for tourism in the post-COVID-19 period.

    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 15, 2021

  • 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 other development banks to end poverty and boost shared prosperity, such as the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB).

    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 Korea, Malaysia, 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, 2021

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