Climate shocks are disrupting livelihoods and economies in Asia and the Pacific.  A much-needed transition to low-carbon development can also exert unintended socioeconomic costs.  A deeper understanding of how climate change, climate action and macroeconomic outcomes interact is essential for long-term economic stability and development in the region.  The 2025 edition of the Economic and Social Survey of Asia and the Pacific examines this nexus and conducts a new macroeconomic-climate readiness assessment.

The report released by the Economic and Social Commission for Asia and the Pacific (ESCAP) on April 8, in particular, notes that despite the fact that 60% of global economic growth in 2024 is expected to come from the Asia-Pacific region, some countries are still unprepared to cope with climate shocks and the consequences of transitioning to a more eco-friendly system.  

Out of the 30 countries analyzed in the study, 11 were identified as most vulnerable to climate risks from a macroeconomic perspective: Afghanistan, Cambodia, Iran, Kazakhstan, Lao People's Democratic Republic, Mongolia, Myanmar, Nepal, Tajikistan, Uzbekistan, and Vietnam.

The document underscores the complex interaction between macroeconomics and climate. It outlines issues that test the economic resilience of the region, including slower productivity growth, high risks of government debt, and rising trade tensions.

“The growing global economic uncertainty and deepening climate risks also complicate the task for those defining fiscal and monetary policies.  To navigate this changing landscape, not only sound national policies are required but also coordinated regional efforts to safeguard long-term economic prospects and address the issue of climate change," said UN Deputy Secretary-General and ESCAP Executive Secretary Armida Salsiah Alisjahbana.

There are also significant differences in the ability of countries in the region to handle these challenges. While some countries have mobilized significant climate financing and adopted green policies, others face a range of issues, including fiscal constraints, weaker financial systems, and limited capacity for managing public finances.

The review examines how countries are implementing policies to manage the various economic challenges posed by climate change.

Although the economic growth rates of developing economies in the Asia-Pacific region have remained relatively dynamic compared to the rest of the world, the average economic growth in the region slowed to 4.8% in 2024 from 5.2% in 2023 and 5.5% over the five years before the COVID-19 pandemic.

To ensure sustainable economic growth, the report emphasizes the importance of active government support for modernization in more productive and higher-income sectors of the economy.  The region should also leverage its competitive advantages in green industries and value chains as new sources of economic growth, as well as develop inclusive regional economic cooperation that benefits both developed and developing countries.