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Developing Asia to Contract 0.4% in 2020, Grow by 6.8% in 2021

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Economic activity in developing Asia is forecast to contract by 0.4% this year, before picking up to 6.8% in 2021 as the region moves toward recovery from the effects of the coronavirus disease (COVID-19) pandemic, according to a report released by the Asian Development Bank (ADB) today.

The new growth forecast, presented in a regular supplement to the Asian Development Outlook (ADO) 2020 Update, is an improvement from the -0.7% gross domestic product (GDP) growth forecast in September, while the outlook for 2021 remains unchanged. But prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting.

“The outlook for developing Asia is showing improvement. Growth projections have been upgraded for the People’s Republic of China (PRC) and India, the region’s two largest economies,” said ADB Chief Economist Yasuyuki Sawada. “A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region.”

Pandemic-induced lockdowns and restrictions have been eased in varying levels in the region, with merchandise exports rebounding quickly from substantial declines in the second quarter. Mobility is also returning to pre-COVID-19 levels in East Asia and the Pacific, where the spread of COVID-19 has largely been contained or prevented in recent months. A recovery in tourism, however, is likely to be delayed.

Most of developing Asia’s subregions are forecast to contract this year. East Asia is the exception, with an upgraded growth forecast of 1.6% for 2020 on the back of faster than expected recoveries in the PRC and Taipei,China. East Asia’s growth outlook for 2021 is maintained at 7.0%.

South Asia’s GDP is forecast to contract by 6.1% in 2020, revised up from the 6.8% contraction expected in September. Growth in South Asia is forecast to rebound to 7.2% in 2021. The growth forecast for India, the subregion’s largest economy, for fiscal year (FY) 2020 is raised to -8.0%, from the -9.0% projection in September, while outlook for FY2021 is kept at 8.0%.

Economic growth in Southeast Asia remains under pressure as COVID-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines. The subregion’s growth forecast for 2020 is revised down to -4.4% from -3.8% in September. The subregion’s outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2% next year compared to the 5.5% growth forecast in September.

The outlook for the Pacific is unchanged for both 2020 and 2021 at -6.1% and 1.3%, respectively. Central Asia’s growth forecast for 2020 remains at -2.1%, but outlook for 2021 is slightly downgraded to 3.8% from the 3.9% growth projection in September.

Regional inflation is expected to marginally ease to 2.8% in 2020, from the 2.9% projected in September, due to depressed demand and low oil prices. Inflation for 2021 is forecast at 1.9%, down from 2.3% forecast in September. Oil prices are retained at $42.50 per barrel in 2020 before increasing to $50.00 per barrel in 2021.

ADO, ADB’s annual flagship economic publication, is published every April, with an Update published in September and brief supplements published normally in July and December. Developing Asia refers to the 46 developing members of ADB.

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Development

World Bank Supports Croatia in Transforming Its Primary Education

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The World Bank Board of Directors today approved a loan to the Republic of Croatia in the amount of EUR25 million ($28.9 million equivalent) for a project to improve the learning environment in selected primary schools. 

The Croatia: Towards Sustainable, Equitable and Efficient Education Project (SEE Education) will support the Ministry of Science and Education’s (MSE) introduction of the Whole Day School (WDS) system in selected schools, which is designed to improve student learning outcomes, particularly among disadvantaged students, through increased instructional hours and improved teacher training and school infrastructure. Since school days will be better aligned with common working hours, young mothers and fathers, of children attending WDS will find it easier to participate in the labor market and thereby increase their earnings. The project will also strengthen the capacity of MSE to scale up the WDS system at the national level and to implement other needed sector reforms.

Croatia has committed to a set of sweeping reforms, outlined in the National Recovery and Resilience Plan (NRRP) 2021-2026, to modernize and improve the education system and respond to the learning challenges which have been further exacerbated by the COVID-19 pandemic and the two large earthquakes that struck Croatia in 2020.

“We are so pleased to partner with Croatia in this vital effort that will ultimately bring benefits to the whole Croatian society through better learning outcomes, higher labor force participation and increased productivity,” said Jehan Arulpragasam, World Bank Country Manager for Croatia and Slovenia. “The SEE project comes at a critical stage of the transformation of Croatia’s education system and will substantially improve educational opportunities for current and future generations of children, including those from disadvantaged backgrounds and vulnerable groups.”

The proposed project will support a systemic transformation of Croatia’s basic education sector. It will initially help to implement the WDS reform in 50 demonstration schools by providing both technical assistance and the needed infrastructure. The capacity built as a result of these efforts will help authorities to introduce the WDS model at the national level. The direct beneficiaries of the project will include approximately 32,500 students, their parents and teaching and administrative staff.

The project will also support the design of new infrastructure standards for Croatian schools, incorporating seismic resilience into building upgrades, and encompassing best practice OECD-EU climate, environment, and energy-efficiency standards, contributing to the European Green Deal agenda.

The World Bank has been a partner to Croatia for over 27 years. During this period, the Bank has supported more than 50 projects, worth almost US$5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies. The Bank’s current program focuses on mitigating the economic and social impact of COVID-19, post-earthquake reconstruction, transport, justice, innovation, business environment, land administration, science and technology, and economic development of the Pannonian region.

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Despite COVID-19 connectivity boost, world’s poorest left far behind 

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Digital connectivity is indispensable to overcome the pandemic, and for a sustainable and inclusive recovery. Photo: United Nations/Chetan Soni

Some 2.9 billion people still have never used the internet, and 96 per cent live in developing countries, a new UN report has found. According to the International Telecommunication Union (ITU), the estimated number of people who have gone online this year actually went up, to 4.9 billion, partially because of a “COVID connectivity boost”.   

This is good news for global development, but ITU said that people’s ability to connect remains profoundly unequal – as many hundreds of millions might only go online infrequently, using shared devices or facing connection speeds that hamper their internet use. 

“While almost two-thirds of the world’s population is now online, there is a lot more to do to get everyone connected to the Internet,” Houlin Zhao, ITU Secretary-General said. 

“ITU will work with all parties to make sure that the building blocks are in place to connect the remaining 2.9 billion. We are determined to ensure no one will be left behind.” 

‘Connectivity boost’ 

The UN agency’s report found that the unusually sharp rise in the number of people online suggests that measures taken during the pandemic contributed to the “COVID connectivity boost.” 

There were an estimated 782 million additional people who went online since 2019, an increase of 17 per cent due to measures such as lockdowns, school closures and the need to access services like remote banking.  

Uneven growth 

According to the document, users globally grew by more than 10 per cent in the first year of the COVID crisis, which was the largest annual increase in a decade. But it pointed out that growth has been uneven. 

Internet access is often unaffordable in poorer nations and almost three-quarters of people have never been online in the 46 least-developed countries.  

A ‘connectivity Grand Canyon’ 

Speaking in Geneva, Doreen Bogdan-Martin, Director of the ITU said: “The internet divide runs deep between developed and developing countries. Only a third of the population in Africa is using the internet. 

“In Europe, the shares are almost 90 per cent, which is the gap between those two regions of almost 60 percentage points. And there is what the UN Secretary-General António Guterres, has called in his Common Agenda blueprint for the future, “a connectivity Grand Canyon”. 

‘Digitally excluded’ 

The report found that younger people, men and urban dwellers are more likely to use the Internet than older adults, women and those in rural areas, with the gender gap more pronounced in developing nations. 

Poverty, illiteracy, limited electricity access and a lack of digital skills continued to hinder “digitally excluded” communities, ITU noted. 

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World Bank Group and Azerbaijan Sign Agreement to Strengthen Partnership

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The Government of the Republic of Azerbaijan and the World Bank Group signed today an Agreement on Establishing and Operation of Offices in Azerbaijan.

The Agreement was signed by Minister of Finance Samir Sharifov, on behalf of the Republic of Azerbaijan, and World Bank Vice President for Europe and Central Asia Anna Bjerde, on behalf of the World Bank Group. Prime Minister of Azerbaijan Ali Asadov and Governor of the Central Bank of Azerbaijan Elman Rustamov also took part in the signing event.

The signing of the new Establishment Agreement will greatly facilitate the work of the World Bank Group in Azerbaijan, including administration of its offices in Baku, to support joint efforts to achieve a green and resilient recovery through sustainable, inclusive and equitable growth.

“Our partnership with the World Bank has seen Azerbaijan’s incredible transition from a lower-income country to a donor of the International Development Association, the part of the World Bank Group that helps the world’s poorest countries,” said Ali Asadov, Prime Minister of Azerbaijan. “This agreement will help augment these achievements.”

The World Bank has financed over 50 projects, with total commitments of $4.4 billion, spanning many national development priorities, including building human capital, strengthening access to infrastructure, public services and jobs, investing in agricultural competitiveness and rural development, and supporting the livelihoods of internally displaced persons.

“We look forward to continuing to grow and develop our collaboration with the Government of Azerbaijan and to bringing the best experience and expertise the World Bank can offer in support of Azerbaijan’s 2030 vision and development goals,” said Anna Bjerde, World Bank Vice President for Europe and Central Asia.

As the largest global development institution focused on the private sector in emerging markets, IFC, a member of the World Bank Group, has been supporting the private sector in Azerbaijan and has invested around $850 million in the country, including mobilization.

“A vibrant private sector is crucial for economic growth. The signing of this agreement with Azerbaijan comes at a time when the country is taking steps to have the private sector drive economic diversification. IFC is committed to continue supporting sustainable growth in Azerbaijan by helping mobilize the power of the private sector,” said Wiebke Schloemer, IFC’s Acting Vice President for Europe, Latin America, and the Caribbean.

2022 will mark the 30th anniversary of Azerbaijan’s membership in the World Bank.

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