Description

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Context

The Asia Pacific region is highly vulnerable to climate shocks which could cause annual economic losses of at least 6% in 1/3^rd of the countries.

The United Nations Economic and Social Commission for Asia and the Pacific released this report warning of the macroeconomic implications of climate change.

Economic Importance of the region

Despite contributing 60% of global economic growth in 2024 the region is poorly equipped to handle climate induced shocks.

The green transition and climate resilience are lagging in many developing economies.

Findings of the Report

11 countries were flagged as highly vulnerable to climate-related macroeconomic risks. These include Afghanistan, Cambodia, Iran, Kazakhstan, Laos, Mongolia, Myanmar, Nepal, Tajikistan, Uzbekistan, Vietnam.

Estimated Average Annual Loss (AAL)

AAL = The estimated annual economic loss from climate disasters that is floods, droughts, storms etc.

Average for the 30 countries studies is 4.8% of GDP.

Cambodia has the highest at nearly 11% of GDP.

Fiji, Myanmar, Pakistan have AAL ≥ 7% of GDP.

Drivers of High Economic Losses

Increasing frequency and intensity of floods, droughts, heatwaves and cyclones.

Economies heavily reliant on agriculture, energy and manufacturing.

Poor infrastructure in countries like Fiji, Myanmar, Pakistan.

Rapid urbanisation and land use change in Vietnam worsen the impact.

Recommendations

Invest in climate proof infrastructure.

Improve early warning systems and risk informed planning.

Support shifts to higher productivity and income sectors.

Promote green value chains and sustainable industrialisation.

Enhance regional policy alignment.

Develop frameworks that benefit both developed and developing nations.

Strategic Importance for India

India though not explicitly named faces similar climate threats and should

Integrate AAL type metricsin fiscal planning.

Enhance agriculture insurance and urban resilience measures.

Tap into green sectors as engines of growth.

United Nations Economic and Social Commission for Asia and the Pacific

Aspect	Details
Established	1947 originally as the Economic Commission for Asia and the Far East
Headquarters	Bangkok, Thailand
Parent Organization	United Nations Economic and Social Council
Membership	53 member states and 9 associate members including India, China, Australia, Russia, etc.
Mandate	Promote inclusive and sustainable economic and social development in the Asia-Pacific region
Core Areas of Work	Macroeconomic policy Trade and investment Transport and logistics Environment and development Disaster resilience Information and Communication Technology Social development Statistics and data
Key Functions	Policy dialogue and capacity building Regional cooperation and integration Data and statistics Technical assistance and research
Recent Major Reports	Economic and Social Survey of Asia and the Pacific (annual) Asia-Pacific Disaster Report Financing for Development Report
Importance for India	Promotes regional cooperation on trade, connectivity, sustainable development Supports India’s SDG implementation and disaster preparedness
Associated Platforms	Asia Pacific Forum on Sustainable Development Asia Pacific Risk and Resilience Portal
Notable Achievement	First UN body to systematically integrate disaster risk reduction with economic planning

Sources:

DOWNTOEARTH

PRACTICE QUESTION

Q. The increasing frequency and intensity of climate shocks in the Asia-Pacific region pose a severe threat to economic stability and development. Examine the macroeconomic implications of such climate shocks, particularly for developing countries. 250 Words.