The world economy is experiencing a very strong but uneven recovery, with many emerging market and developing economies facing obstacles to vaccination. The global outlook remains uncertain, with major risks around the path of the pandemic and the possibility of financial stress amid large debt loads. Policy makers face a difficult balancing act as they seek to nurture the recovery while safeguarding price stability and fiscal sustainability. A comprehensive set of policies will be required to promote a strong recovery that mitigates inequality and enhances environmental sustainability, ultimately putting economies on a path of green, resilient, and inclusive development. Prominent among the necessary policies are efforts to lower trade costs so that trade can once again become a robust engine of growth. This year marks the 30th anniversary of the Global Economic Prospects. The Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.

The economic outlook for the developing EAP region remains positive, and will benefit from an improved external environment as well as strong domestic demand. The growth of regional GDP excluding China is forecast to accelerate in 2018, while China's GDP growth is expected to decline in 2018 and 2019, although remain higher than most countries in the region. Poverty is projected to continue its long-term decline. Major downside risks include financial sector vulnerabilities, large fiscal imbalances, and the possible escalation of geopolitical tensions. The improved outlook for global growth provides a window of opportunity for developing EAP to continue to reduce key vulnerabilities and strengthen the foundations for sustained and inclusive growth in the medium term. The region could also benefit from further developing tourism sectors and deepening of regional integration, to offset the emerging global protectionism. And policies to ensure inclusive growth should involve ensuring economic mobility and security for all, going beyond the primary focus on reducing poverty.

"Developing EAP grew slightly faster than anticipated in 2017. The growth ofregional GDP excluding China is forecast to accelerate in 2018, while China's GDP growth is expected to moderate as the economy keeps rebalancing. Major downside risks include volatility associated with faster than expected' monetary policy tightening in advanced economies and rising threat of trade restrictions. Developing EAP countries would need to get ready to respond to increasing interest rates and find ways to raise potential growth in the medium run. Specifically, amid the rising risk of protectionism and changes in the global manufacturing landscape, countries should continue to enhance trade facilitation and integration, increase the effectiveness of schools and education systems and upgrade capabilities to ensure that workers and managers have necessary skills. To provide economic security to the population, policies should focus on strengthening social assistance and insurance programs and increasing resilience to systemic shocks."

This edition of the biennial Poverty and Shared Prosperity report brings sobering news. The COVID-19 (coronavirus) pandemic and its associated economic crisis, compounded by the effects of armed conflict and climate change, are reversing hard-won gains in poverty reduction and shared prosperity. The fight to end poverty has suffered its worst setback in decades after more than 20 years of progress. The goal of ending extreme poverty by 2030, already at risk before the pandemic, is now beyond reach in the absence of swift, significant, and sustained action, and the objective of advancing shared prosperity—raising the incomes of the poorest 40 percent in each country—will be much more difficult. Poverty and Shared Prosperity 2020: Reversals of Fortune presents new estimates of COVID-19's impacts on global poverty and shared prosperity. Harnessing fresh data from frontline surveys and economic simulations, it shows that pandemic-related job losses and deprivation worldwide are hitting already poor and vulnerable people hard, while also shifting the profile of global poverty to include millions of 'new poor.' Original analysis included in the report shows that the new poor are more urban, better educated, and less likely to work in agriculture than those living in extreme poverty before COVID-19. It also gives new estimates of the impact of conflict and climate change, and how they overlap. These results are important for targeting policies to safeguard lives and livelihoods. It shows how some countries are acting to reverse the crisis, protect those most vulnerable, and promote a resilient recovery. These findings call for urgent action. If the global response fails the world's poorest and most vulnerable people now, the losses they have experienced to date will be minimal compared with what lies ahead. Success over the long term will require much more than stopping COVID-19. As efforts to curb the disease and its economic fallout intensify, the interrupted development agenda in low- and middle-income countries must be put back on track. Recovering from today's reversals of fortune requires tackling the economic crisis unleashed by COVID-19 with a commitment proportional to the crisis itself. In doing so, countries can also plant the seeds for dealing with the long-term development challenges of promoting inclusive growth, capital accumulation, and risk prevention—particularly the risks of conflict and climate change.

Aging is a challenge which countries in East Asia and Pacific (EAP) regions are grappling with or will soon confront. It raises many questions for policymakers ranging from potential macroeconomic impacts, to fiscal challenges of supporting pension, health and long-term care systems, and labor market implications as countries seek to promote productive aging. The urgency of the aging challenge varies across the region, but it will confront all EAP countries in time and early preparation is essential to avoid the missteps of other regions. Live Long and Prosper discusses the societal and public policy challenges and reform options for EAP countries as they address aging. It aims to strike a balance between aging optimists and pessimists. On the one hand, the impacts of aging on growth, labor markets and public spending are not the unavoidable catastrophe often feared. However, minimizing the downside risks of aging and ensuring healthy and productive aging will require proactive public policy, political leadership, and new mindsets across society. The report reviews the evidence on demographic transition in EAP and its potential macroeconomic impact. It addresses the current policy environment including pensions and social security, health, and long-term care and labor markets to assess the risks of 'business as usual'. It also suggests policy directions to promote healthy and productive aging in EAP, and emphasizes that aging is not just about older people, but requires policy and behavioral change across the life cycle.

East Asia has been a paragon of global development success. The dramatic transformation of the region over the past half century—with a succession of countries having progressed from low-income to middle-income and even to high-income status—has been built on what has come to be known as the “East Asian development model.†? A combination of policies that fostered outward-oriented, labor-intensive growth while strengthening basic human capital and providing sound economic governance has been instrumental in moving hundreds of millions of people out of poverty and into economic security. Yet East Asia’s economic resurgence remains incomplete. More than 90 percent of its people now live in 10 middle-income countries, many of which can realistically aspire to high-income status in the next generation or two. But these countries are still much less affluent and productive than their high-income counterparts. Even as the region’s middle-income countries attempt to move up to high-income status, they confront a rapidly changing global and regional economic environment. Slowing growth in global trade and shifts in its patterns, rapid technological change, and evolving country circumstances all present challenges to sustaining productivity growth, fostering inclusion, and enhancing state effectiveness. A Resurgent East Asia: Navigating a Changing World is about how policy makers across developing East Asia will need to adapt their development model to effectively address these challenges in the coming decade and sustain the region’s remarkable development performance. “The world is changing. How do East Asia’s developing economies navigate this change? This is a commendable book on this topic—a must-read for policy makers, academia, and students who are interested in East Asia.†? — Chatib Basri, Former Minister of Finance, Government of Indonesia “A Resurgent East Asia is a vital publication for the most successful region as it looks to the future and the expectations of its citizens. This study helps to identify the new areas of risk and to suggest ways to ameliorate them. In so doing, it is an invaluable resource for governments. Based on first-rate analysis, it is a must-read for policy makers and everyone interested in East Asia’s development prospects!†? — Danny Leipziger, Managing Director, The Growth Dialogue, and Professor of International Business, George Washington University “This report delivers a careful and rigorous analysis of the strengths of East Asia’s ‘growth with equity’ development strategy. While noting the model’s success in lifting millions out of poverty, the report also warns of the looming challenge of maintaining growth with inclusion, and it highlights the need for countries to improve their social protection systems and ensure that opportunities are fair and available to all. A must-read for policy makers and development practitioners alike.†? — Ana Revenga, Senior Fellow, Brookings Institution

The global economy is in a broad-based cyclical recovery. Investment, manufacturing and trade are on the rebound. Financing conditions are benign, monetary policies are generally accommodative, and the worst impacts of the recent commodity price collapse have begun to dissipate. However, the global economic outlook remains clouded by a number of risks. These include the possibility of financial market disruptions, rising protectionist sentiment, and heightened geopolitical tensions. Of particular concern is evidence of subdued productivity and slowing potential growth. In addition to discussing global and regional economic developments and prospects, this edition of Global Economic Prospects includes a chapter on the causes of the broad-based slowing of potential growth and suggests remedies. The report also contains Special Focus sections on the impact of the 2014-2016 oil price collapse and the relationship between education demographics and global inequality. Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing countries, on a semiannual basis (in January and June). The January edition includes in-depth analyses of topical policy challenges faced by these economies, while the June edition contains shorter analytical pieces.