The Asian Development Bank – ADB opines that regional cooperation is indeed crucial so as to mobilize climate finance, especially from the private sector. Since Asia needs an estimated $1.1 trillion every year in order to address climate change. However, with just $300 billion currently that are made available in the region, the overall financing needs are pretty big.
It is well to be noted that the regional cooperation has already proven to be very effective as far as developing sustainable financial markets is concerned so as to raise the needed financing. Regional cooperation is indeed essential so as to track and lessen the macro financial risks when it comes to climate finance. The regional financial safety net needs an upgrade of its policy set in order to manage the climate change-related crisis, as per the Asian Economic Integration Report 2025, which has been published recently.
According to the ADB report, significant economic damage as well as financial risk from Asia’s high susceptibility to climate change endangers the regional financial integration. Interestingly, Asia happens to be hit hard by the growing frequency as well as severity of storms, heat waves, floods, and even droughts.
There is also a threat to the livelihoods, which is coming from the rising sea levels, specifically pronounced in the region in which 70% of the overall global population susceptible to sea level rise happens to reside. As of now, the climate-dependent sectors, such as agriculture, comprise almost one-third of the employment.
Notably, economic losses which are coming out from the climate change are anticipated to reach an average of 40% by 2100, in a way triggered by numerous macroeconomic risks, such as losses in revenue from the disruption of economic activity after disasters, high spending from subsidies in order to cope with the prices of energy that are rising, and also alterations when it comes to inflation as well as exchange rates, which result from the climate change-related supply as well as the demand shocks.
According to the report, the preferential trade agreements – PTAs throughout the Asia Pacific region, still happens to remain pretty, slim, and shallow, and in fact has had a limited impact. But the expansion of PTA highlights its robust commitment to the regional integration as well as worldwide connectedness.
A major rise when it comes to the PTA, which happens to be now at 45% of the overall global PTS, highlights Asian continents thrust in terms of expanding the market taxes and also deepening the economic collaboration, even though there is a slow multilateral progress taking place.
Although the PTAs have pushed intra-regional production trade shares in Asia to a new high, their impact happens to get hampered due to shallow commitments and intricate administrative needs and also limitations when it comes to promoting export diversification along with service trade. In order to address these situations, there is a need for policy reforms that are aimed at simplifying the trade rules, making sure that the commitments are deep, and also syncing the rules of origin criteria with the regional patterns and productions.
The value of regional trade in Asia has also increased by a yearly average of 8.2% from 1992 to 2023 – it is faster growth than the growth of extra-regional trade at 6.8%. The report highlights the economic integration, which has been very crucial in Asia and the Pacific’s unmatched economic growth as well as rapidly growing global clout in the past two decades. The ADB goes on to estimate that the degree of Asia’s integration and trade is almost comparable to that of the EU along with the UK.
The report also says that the worldwide investment patterns have been quite influenced due to geopolitical tensions along with prominent industrial developments as well as changing policy scenarios within the host economies. The ADB prediction suggests that the greenfield investments within trade-exposed sectors went on to experience a sharp dip as compared to other sectors in the period of rising geopolitical issues.
Notably, South Asia comprised almost half of the overall Asian out-migrants. Our of the top 10 migrant-sending economies coming from the region in 2021, migrants from four South Asian countries comprised almost 37% of the overall out-migrants. The intraregional migration pie happens to remain at 40% on average from 1990 to 2021 which is very consistent.
It is well to be noted that migration, remittances, as well as tourism or the movement of people, have gone on to remain quite consistent too. Financial integration has been the lowest, which is even lower than the trade, investment along with the movement of people, and has fallen behind that of the EU and also the UK. This growth, when it comes to the regional integration, has gotten support from various programs, projects, and even policy dialogue.
Cooperation by way of trade facilitation, in addition to the development when it comes to the economic corridors as well as transport, has also gone on to add to the advanced integration all across the region. Expanding the overall digital connectivity as well as interviews in order to address climate finance, along with the support of the shared national and regional commitments, are certain strategic areas when it comes to the future cooperation as well as integration as far as regional public goods are concerned.
Speeding up the overall regional cooperation when it comes to enhancing physical as well as institutional connectivity is going to increase tourism competitiveness as well as dependence, thereby unlocking the potential of the sector as far as economic development is concerned and which is what the regional aspirations happen to be. The international arrivals when it comes to Asia saw growth at an average annual rate of 7.6% from 2010 to 2019, thereby outpacing the global average of 5.1%-hence increasing the total internal tourism share from 73% to almost 77.5%.
