CHAPTER THREE • OFID IN THE WORLD
Asia: Energy, finance, health and transport operations top the bill
Economic context
Real growth of 5.6% in 2018 was similar to that in 2017, although there was a distinct difference across the region depending on each economy’s structure and resource base. The multi-year growth trend carried over into 2018 due to a combination of stronger domestic demand, recovering global trade and ongoing infrastructure spending. How- ever, there were some setbacks, such as disruptions in India related to demoneti- zation and the rollout of a goods and services tax. Amid the overall positive backdrop, headline inflation accelerated to a still comfortable 3% due to higher oil and other commodity prices, currency depreciation against the US dollar (which pushed up the price of imported goods), and robust domestic demand. Fiscal policy varied substantially across the region, reflecting cyclical conditions, attempts to reduce fiscal deficits or lift growth, and efforts to promote greater social inclusion. Export growth generally slowed in 2018 but remained strong. Current account balances narrowed – owing to higher oil prices – to an aggregate of almost zero, from 1% of GDP the year before.
Social context
Ongoing efforts continued in 2018 to move the extreme poor out of poverty, helping human development steadily improve across developing Asia, particu- larly in South Asia. At the same time, less extreme poverty has decreased significantly across most of the region. Many economies have made the transition to middle-income and even advanced-economy status within several generations, highlighting the successful mix of integrating with the global economy, high savings rates, large investments in human and physical
capital, and sound macroeconomic policies. However, despite these improvements, entrenched poverty remains a key challenge: more than one billion people in the region still live on less than $3 a day, of which several hundred million are estimated to live in extreme poverty, below the threshold of around $2 a day. In addition, the region’s population has continued to grow quickly, undermining progress on improving livelihoods and holding back per capita GDP growth in many countries. Meanwhile, child malnutrition remains widespread, which will under- mine employment prospects and productivity gains, while the effects arising from climate change add a further burden to efforts geared toward meeting the SDGs. In summary, the region has made progress but continues to face many challenges that entrench poverty and inequality.
OFID in Asia
Asia attracted $383.76m (25.6%) of OFID’s 2018 approvals. In total, 20 Asian countries benefited. Across these countries, the energy sector received $103.2m, the financial sector $100m, health $92m, transport $40m and the rest was split between other sectors including agriculture, education, industry and multisectoral operations. Emergency relief aid to Asia accounted for $2.9m of OFID approvals.
$141.6m of the total for Asia was approved under public sector opera- tions. The region’s private sector attracted $52m, while $180m was approved in trade financing. The remaining $10.16m was approved in grant financing.
Asia attracted $383.76m of OFID’s 2018 approvals
For more information please visit:
http://www.ofid.org/COUNTRIES/Asia
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