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Spending on health increase faster than rest of global economy

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Spending on health is outpacing the rest of the global economy, particularly in low- and middle-income countries, the World Health Organization (WHO) said on Wednesday.

According to the UN health agency, “countries are spending more on health, but people are still paying too much out of their own pockets”.

The agency’s new report on global health expenditure launched on Wednesday reveals that “spending on health is outpacing the rest of the global economy, accounting for 10 per cent of global gross domestic product (GDP).

The trend is particularly noticeable in low- and middle-income countries where health spending is growing on average six per cent annually compared with four per cent in high-income countries.

Health spending is made up of government expenditure, out-of-pocket payments and other sources, such as voluntary health insurance and employer-provided health programmes.

While reliance on out-of-pocket expenses is slowly declining around the world, the report notes that in low- and middle-income countries, domestic public funding for health is increasing and external funding in middle-income countries, declining.

Highlighting the importance of increasing domestic spending for achieving universal health coverage and the health-related Sustainable Development Goals (SDGs), Dr. Tedros Adhanom Ghebreyesus, WHO’s Director-General, said that this should be seen as “an investment in poverty reduction, jobs, productivity, inclusive economic growth, and healthier, safer, fairer societies.”

Worldwide, governments provide an average of 51 per cent of a country’s health spending, while more than 35 per cent of health spending per country comes from out-of-pocket expenses. One consequence of this is 100 million people pushed into extreme poverty each year, the report stresses.

When government spending on health increases, people are less likely to fall into poverty seeking health services. But government spending only reduces inequities in access when allocations are carefully planned to ensure that the entire population can obtain primary health care, the UN agency said.

“All WHO’s 194 Member States recognized the importance of primary health care in their adoption of the Declaration of Astana last October,” said Agnés Soucat, WHO’s Director for Health Systems, Governance and Financing. “Now they need to act on that declaration and prioritize spending on quality healthcare in the community,” she added.

The report also examines the role of external funding. As domestic spending increases, the proportion of funding provided by external aid has dropped to less than one per cent of global health expenditure. Almost half of these external funds are devoted to three diseases – HIV/AIDS, tuberculosis (TB) and malaria.

The report also points to ways that policy makers, health professionals and citizens alike can continue to strengthen health systems.

“Health is a human right and all countries need to prioritize efficient, cost-effective primary health care as the path to achieving universal health coverage and the Sustainable Development Goals,” Dr. Soucat concluded.

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East Asia and Pacific: Countries Must Act Now to Mitigate Economic Shock of COVID-19

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The virus that triggered a supply shock in China has now caused a global shock. Developing economies in East Asia and the Pacific (EAP), recovering from trade tensions and struggling with COVID-19, now face the prospect of a global financial shock and recession.

Sound macroeconomic policies and prudent financial regulation have equipped most EAP countries to deal with normal tremors.  But we are witnessing an unusual combination of disruptive and mutually reinforcing events. Significant economic pain seems unavoidable in all countries. Countries must take action now – including urgent investments in healthcare capacity and targeted fiscal measures – to mitigate some of the immediate impacts, according to East Asia and Pacific in the Time of COVID-19, the World Bank’s April 2020 Economic Update for East Asia and the Pacific.

In a rapidly changing environment, making precise growth projections is unusually difficult. Therefore, the report presents both a baseline and a lower case scenario. Growth in the developing EAP region is projected to slow to 2.1 percent in the baseline and to negative 0.5 in the lower case scenario in 2020, from an estimated 5.8 percent in 2019. Growth in China is projected to decline to 2.3 percent in the baseline and 0.1 percent in the lower case scenario in 2020, from 6.1 percent in 2019. Containment of the pandemic would allow for a sustained recovery in the region, although risks to the outlook from financial market stress would remain high.

The COVID-19 shock will also have a serious impact on poverty. The report estimates that under the baseline growth scenario, nearly 24 million fewer people will escape poverty across the region 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, and the lower-case scenario prevails, then poverty is estimated to increase by about 11 million people. Prior projections estimated that nearly 35 million people would escape poverty in EAP in 2020, including over 25 million in China alone.

“Countries in East Asia and the Pacific that were already coping with international trade tensions and the repercussions of the spread of COVID-19 in China are now faced with a global shock,” said Victoria Kwakwa, Vice President for East Asia and the Pacific at the World Bank. “The good news is that the region has strengths it can tap, but countries will have to act fast and at a scale not previously imagined.”

Among the actions recommended by the report are urgent investments in national healthcare capacity and longer-term preparedness.  The report also suggests taking an integrated view of containment and macroeconomic policies. Targeted fiscal measures – such as subsidies for sick pay and healthcare – would help with containment and ensure that temporary deprivation does not translate into long-term losses of human capital.

“In addition to bold national actions, deeper international cooperation is the most effective vaccine against this virulent threat.  Countries in East Asia and the Pacific and elsewhere must fight this disease together, keep trade open and coordinate macroeconomic policy,” said Aaditya Mattoo, Chief Economist for East Asia and the Pacific at the World Bank.

The report calls for international cooperation and new cross-border public-private partnerships to ramp up the production and supply of key medical supplies and services in the face of the pandemic, and to ensure financial stability in the aftermath. Critically, trade policy should stay open so medical and other supplies are available to all countries, as well as to facilitate the region’s rapid economic recovery.

Another policy recommendation is easing credit to help households smooth their consumption and help firms survive the immediate shock.  However, given the potential of an extended crisis, the report emphasizes the need to couple such measures with regulatory oversight, particularly as many countries in EAP already carry a high burden of corporate and household debt. For poorer countries, debt relief will be essential, so that critical resources can be focused on managing the economic and health impacts of the pandemic.

The report also highlights the substantially higher risk of falling into poverty among households dependent on sectors that are particularly vulnerable to COVID-19 impacts, such as tourism in Thailand and the Pacific Islands, manufacturing in Cambodia and Vietnam, and among households dependent on informal labor in all countries.  In some countries, the impact of COVID-19 comes on top of country-specific factors, such as droughts (Thailand) or commodity shocks (Mongolia). In the Pacific Island countries, the outlook for 2020 is subject to substantial risks due to their economies’ reliance on grants, tourism, and imports.

Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. The analysis in the report is based on the latest country-level data available as of March 27.

The World Bank Group is rolling out a $14 billion fast-track package to strengthen the COVID-19 response in developing countries and shorten the time to recovery. The immediate response includes financing, policy advice and technical assistance to help countries cope with the health and economic impacts of the pandemic. The IFC is providing $8 billion in financing to help private companies affected by the pandemic and preserve jobs. IBRD and IDA are making an initial US$6 billion available for the health-response.  As countries need broader support, the World Bank Group will deploy up to $160 billion over 15 months to protect the poor and vulnerable, support businesses, and bolster economic recovery.

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‘Concerted efforts’ needed to meet 2030 Global Goals in Asia-Pacific region

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Action to reverse the depletion and degradation of the environment across Asia and the Pacific is a top priority if the region is to stay on course to meet the Sustainable Development Goals (SDGs), according to a new United Nations report launched online, for the first time, on Tuesday.

In the Asia and the Pacific SDG Progress Report 2020, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) draws attention to the region’s poor performance on most of the measurable environmental targets of the 2030 Agenda for Sustainable Development, to determine where additional effort is needed and where momentum for future progress is building.

“Our analysis finds that the Asia-Pacific region has struggled the most with two Goals: advancing responsible consumption and production, and climate action”, observed UN Under-Secretary-General and ESCAP Executive Secretary Armida Salsiah Alisjahbana.

The flagship report sounded the alarm for the Asia-Pacific region to “urgently” foster sustainable resource usages, improve waste management, increase natural disaster resilience and enact policies to adapt to climate change impacts.

For example, the report reveals that the region emits half of the world’s total greenhouse gases which add to carbon emissions – a number which has doubled since 2000. Around 35 per cent of countries there continue to lose areas of forest, and the share of renewable energy has dropped to 16 per cent, one of the lowest rates globally.

A ray of light

On a positive note, many countries are showing remarkable progress on SDG 4 by improving the quality of education, as well as on SDG 7 – providing access to affordable and clean energy – making these two Goals well within reach.

And according to the report, the region is also making good progress on economic targets, although the data for report pre-dates the arrival of the coronavirus pandemic, which has caused a global economic slowdown.

It points out that in 2017, the real gross domestic product per capita growth in the region was more than double the world average, while at least 18 countries in the region were experiencing less income inequality.

Yet, to grow more sustainably and equitably, the current economic progress of the region must be aligned with human well-being and a healthy environment. 

The report reveals that progress has been far too slow in areas such as SDG 5, gender equality, and SDG 11, building sustainable cities and communities. 

Moreover, ESCAP warned that without concerted and extra efforts from all concerned, the region remains unlikely to meet any of the 17 SDGs by 2030.
“The region is not even moving in the right direction”, underscored Ms. Alisjahbana. 

Asia-Pacific subregions

Progress has also been uneven across the five subregions of Central, East, South, Southeast and Western Asia.

Singled out as areas where progress has been mixed, were SDG 10 to reduce inequalities; SDG 12 for responsible consumption and production; and SDG 16, which highlights the need for peace, justice and strong institutions.
However, steady improvement in electricity was a positive example of collective progress across the five subregions, particularly in rural areas. 

Gathering data 

While SDG data for each indicator has substantially increased in Asia and the Pacific -– from 25 per cent in 2017 to 42 per cent in 2020 -– it is still lacking in relation to half of the Global Goals indicators, especially those with slow progress. ESCAP flags that this highlights the urgent need to strengthen the policy-data nexus in the region. 

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Mongolia Poverty Update: Report

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The National Statistics Office of Mongolia (NSO) and the World Bank today launched a new joint poverty report, Mongolia Poverty Update, which draws on the 2018 Household Socio-Economic Survey (HSES).

According to the report, the pace of poverty reduction slowed down despite robust macroeconomic growth, indicating that Mongolia is struggling to translate the benefits of macroeconomic growth into improvements in household welfare, especially for the poor.

The report also highlights the uneven progress in poverty reduction between urban and rural areas during 2016-2018. Overall, these were good years for most rural herders as a result of higher livestock product prices. By contrast, urban residents in the poorest group were most negatively affected. Out of all the consumption classes, only the poorest urban households experienced negative real income growth (-1.0 percent, YoY) during this period due to sluggish wage and business income growth. Higher food price inflation also disproportionately affected urban poor and vulnerable households which spend a majority of income on food and purchase food items out of their own pockets. As a result, the rural poverty rate fell by 4.1 percentage points while the urban poverty rate was little changed from 2016 to 2018.

“This poverty report provides us with the latest updates of poverty status and profile of people in Mongolia and highlights the challenges and opportunities to tackle poverty reduction going forward,” said Ms. A. Ariunzaya, Chairperson of the National Statistics Office. “We strongly hope that the analysis and findings of this report shall serve as reference material not only for policy- and decision-makers, but also for researchers and a diverse range of audiences interested and working in poverty and socio-economic studies.”

The updated poverty profile shows that poverty is most prevalent among low-skilled wage workers, the unemployed and economically inactive individuals, large families and children. Important challenges are also seen in service delivery, particularly with regard to proper sanitation and reliable heating sources.

Mongolia’s education attainment level, particularly among youth, is the highest in the East Asia region, but for women, having a university diploma does not necessarily mean that they can obtain a better-paying job. The gender gap in labor force participation has barely improved over the past decade. Furthermore, despite a great improvement of herders’ welfare level, they remain highly vulnerable to livestock price shocks and harsh winters, which could have a profound impact on their well-being without adequate safety nets.

Mongolia is one of the youngest countries in the region in terms of the demographic structure. To harness the upcoming demographic dividend opportunity for inclusive growth and poverty reduction, the report suggests that the country will need to create a sufficient number of job opportunities in a wide variety of productive sectors in order to absorb these new workers.

“Monitoring and analyzing quality and timely data from the household surveys will help to track progress to date as well as shed light on where support and policy interventions are most needed,” said Andrei Mikhnev, World Bank Country Manager for Mongolia. “To accelerate poverty reduction and promote shared and sustainable prosperity in Mongolia, investment in children and youth to improve their skillsets to meet labor market needs is crucial, as is promotion of fair and equitable labor force participation for women.”

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