UNESCAP’s 2025 Blueprint: Balancing Climate Risk and Inclusive Growth in Asia-Pacific

The Asia-Pacific region sits at a critical juncture as the world edges into a new economic era shaped by climate urgency. It remains the fastest-growing region globally, contributing around two-thirds of the world’s economic expansion in 2023. Yet behind this economic velocity lies a growing imbalance, where the climate crisis deepens vulnerability, inequality hardens into structures, and rising public debt casts long shadows over development prospects. The UNESCAP Survey 2025, published by the UN’s Economic and Social Commission for Asia and the Pacific, peels back the layers to examine what sustainable growth must mean in the coming decade.

This year’s report goes beyond traditional forecasting. It introduces a new lens to assess economic resilience, connecting fiscal health to climate readiness, and growth statistics to human wellbeing. But the Survey also delivers a quiet warning. Unless Asia-Pacific economies shift from short-term growth fixations to long-term, inclusive planning, they risk slowing momentum and losing the social and environmental foundations on which growth depends.

The Evolving Economic Landscape of the Asia-Pacific Region

The numbers on paper may look strong, but they don’t tell the whole story. Economic activity across the region expanded at a respectable 4.6% in 2023. Yet according to the UNESCAP report and World Bank update, the recovery remains “lopsided and vulnerable,” with domestic demand still subdued in many countries, and external pressures — including tighter global monetary policy and geopolitical trade tensions — squeezing fiscal space.

For instance, developing countries like Pakistan and Laos grapple with currency depreciation, high inflation, and growing debt servicing burdens. IMF data show that Asia-Pacific’s average public debt-to-GDP ratio now hovers near 70%, which limits flexibility when investment in infrastructure, adaptation, and social services is most needed.

Even among stronger economies, productivity growth has failed to occur meaningfully since the pandemic. The UNESCAP report finds that labour productivity is growing at barely half the pre-COVID pace. This trend aligns with ILO data on falling real wage growth and job informality. Meanwhile, protectionist policies and shifting supply chains further fragment global trade, forcing countries like Vietnam and Indonesia to navigate increasingly complex export dynamics.

Beyond GDP: Tackling Inequality, Vulnerability, and Data Gaps

The Survey challenges a long-standing economic orthodoxy — that GDP growth will naturally improve lives. As countries grew richer over the last two decades, millions were lifted from extreme poverty. But new forms of inequality have emerged: gender gaps in wages, unequal access to healthcare and education, and limited mobility for people in informal sectors. According to Oxfam International, the top 1% of Asian earners now control more wealth than the bottom 90%.

Crucially, the most climate-vulnerable communities are often the most economically excluded. In rural Cambodia, Bangladesh, and the Pacific Islands, women farmers and fishers are increasingly impacted by changing rainfall, saltwater intrusion, and warming oceans, but receive little to no insurance, training, or finance support. The UN Women’s Gender Snapshot 2023 notes that only 13% of countries in the Asia-Pacific have national climate plans that explicitly incorporate gender responsiveness.

Blind spots in data compound the problem. Many national statistics systems still rely on outdated methods that fail to capture poverty’s multidimensional nature or marginalised groups’ lived realities. In response, civil society organisations in countries like the Philippines and Fiji have begun compiling “people’s data” — community-driven surveys and vulnerability maps, to pressure local governments into delivering tailored solutions. The UNESCAP report sees this kind of participatory data as key to closing the information gap that limits effective policymaking.

Assessing Readiness: Exposure and Coping Abilities of Economies

A unique contribution of this year’s Survey is its framework for assessing readiness, which looks at how climate risk intersects with economic capacity. Nations are grouped not just by their exposure to hazards like drought, storms, and rising seas, but also by their institutional and financial ability to respond. Unsurprisingly, Small Island Developing States (SIDS) emerge as the most exposed and least equipped — a finding echoed in the IPCC’s Report.

Take Kiribati or the Solomon Islands, where infrastructure is already being damaged by rising tides and saline intrusion is contaminating freshwater supplies. Their limited fiscal space, high reliance on imports, and weak insurance penetration mean that even modest climate shocks can trigger long-term development setbacks. Meanwhile, wealthier nations such as South Korea or Singapore, though still vulnerable to climate risks, possess more substantial fiscal buffers, social protection systems, and risk modelling capacities.

Middle-income countries show mixed readiness. The Philippines, for instance, faces regular typhoons and has a highly decentralised disaster response system. However, its social safety net remains underfunded, and public infrastructure spending has stagnated recently. The ESCAP report argues that unless these nations are supported with blended finance, knowledge-sharing, and early-warning systems, the climate crisis could wipe out years of development gains in a single season.

Policy Strategies for Sustainable and Inclusive Development

The good news is a growing consensus on what needs to be done — and the ESCAP Survey offers a practical roadmap. A central recommendation is to revitalise productivity through green transitions. This includes shifting away from carbon-intensive sectors, investing in climate-resilient infrastructure, and building inclusive labour markets. According to BloombergNEF, Asia is set to attract over $1 trillion in clean energy investments by 2030. Still, much of this flows into a handful of economies like China and India.

The report urges regional cooperation in developing green value chains such as clean manufacturing hubs or regional battery alliances to democratise the green transition. It also highlights the role of “developmental states,” governments that actively guide industrial policy, like Vietnam has done in electronics or Malaysia in green tech.

The report pushes for rethinking how budgets are planned at the fiscal level. 

Climate-responsive budgeting is already gaining traction in countries like Nepal and Indonesia, where ministries are now required to assess the climate implications of significant spending decisions. Progressive tax reforms such as taxing windfall profits or ending fossil fuel subsidies are critical to freeing public finance for climate adaptation and social safety nets.

Lastly, social inclusion must be non-negotiable. The ESCAP Survey echoes calls from UNDP and ILO to expand universal social protection, including pension coverage, maternity benefits, and employment guarantees. India’s MGNREGA rural jobs scheme and Thailand’s universal healthcare model are cited as policy templates that blend economic resilience with dignity.

The ESCAP Survey 2025 delivers more than a state-of-the-economy assessment — it maps a path forward for a region at the crossroads of opportunity and risk. It makes clear that economic growth alone is no longer enough. The challenge for policymakers isn’t just to grow their economies, but to build fairer, safer, and more resilient societies to the disruptions ahead. The time has come for Asia-Pacific nations to move from coping to transforming and ensure that no one is left behind.

References:
https://www.unescap.org/kp/2025/survey2025

https://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update

https://www.imf.org/en/Publications/REO/APAC/Issues/2023/09/27/regional-economic-outlook-for-asia-and-pacific-october-2023

https://www.ilo.org/resource/news/asia-pacific-wage-growth-slows-covid-19-impact-ilo-report

https://www.oxfam.org/en/press-releases/richest-1-bag-nearly-twice-much-wealth-rest-world-put-together-over-past-two-years

https://unstats.un.org/sdgs/gender-snapshot/2023

https://caribbean.un.org/en/173533-small-islands-are-increasingly-affected-climate-change-ipcc-report#:~:text=Small%20islands%20are%20already%20reporting,and%20such%20assessments%20are%20limited.

https://www.expressvpn.com/blog/protecting-sinking-nations-online

https://assets.bbhub.io/professional/sites/24/Unlocking-Investment-to-Triple-Renewables-by-2030.pdf

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