- ADB forecasts GDP growth in Southeast Asia to contract by 3.8% in 2020 but to bounce back strongly to 5.5% in 2021 .
- ASEAN green recovery strategies need to be environmentally sustainable, socially inclusive, and climate resilient.
- Innovative ways of raising urgent financing for recovery can include green bonds, COVID transition bonds, and new ways of de-risking funds.
A new ADB book urges policy makers in Southeast Asia to use green and innovative financing to help catalyze the estimated $3.1 trillion investment required for climate-adjusted infrastructure in the region. These investments from both public and private sources are critical to the region’s economic recovery from the coronavirus disease (COVID-19) pandemic. Anouj Mehta from ADB’s Southeast Asia Department explains why the book is timely and important.
This is an extremely critical and relevant book.
Especially for governments in Asia as they start to look at economic recovery packages to try and mitigate the impacts of the COVID-19 pandemic.
The issue is fundamental, with contraction projected across Asia of 0.7%, for the first time in six decades and in Southeast Asia of 3.8%, the impact is on jobs.
Jobs across the board, but especially youth employment.
How to create and recover these jobs which could undo decades of work to try and pull people out of poverty in this region.
Jobs have to be green, sustainable, inclusive and resilient.
Green infrastructure has to be a vital part of a green recovery story simply because of the scale and impact that infrastructure has.
But the issue there is the amount of financing, the volume of financing needed for green infrastructure is immense: $1.7 trillion per annum was already the estimate across Asia, $210 billion for Southeast Asia and the financing gap, 50 or 60% of that, which needed to come from private capital.
Post-COVID, that gap has probably widened and the risk perception a little higher and governments therefore need to create de-risking, and catalyzing mechanisms that can mobilize, pull in the financing from pension funds, insurance companies, commercial banks.
The book gives examples of such mechanisms, green finance mechanisms which have been already done or we are working on as ADB, such as national green finance catalytic mechanisms, green bonds, which we are working on at present etc.
But it also tries to put forward new concepts, green securitization for the region, oceans health financing, blue finance, as well as COVID recovery and COVID transition bond and gives simple examples of how these could be implemented.