Economics & Development

Private consumption continues to underpin growth across East Asia and the Pacific, although consumer confidence remains subdued. Exports of artificial intelligence related electronics were a notable bright spot in 2025, with strong shipment growth from Malaysia, the Philippines, Thailand, and Viet Nam, while exports of other products expanded more slowly. Private investment remains below pre pandemic levels across much of the region amid elevated policy uncertainty and a series of recent shocks. The regional outlook is shaped by three external forces: rising energy prices stemming from conflict in the Middle East, persistent trade policy uncertainty driven by United States tariff measures, and the accelerating global artificial intelligence boom. While artificial intelligence is stimulating investment and reshaping technology supply chains, its diffusion across the region remains limited by gaps in connectivity, skills, and innovation ecosystems. Sustaining longer term growth will depend on reversing a structural productivity slowdown through stronger foundational public goods, reduced policy distortions, and carefully designed, targeted interventions that address market failures while minimizing fiscal and efficiency risks.

RETRADE-Eastern Africa MPA Phase 1 for Eastern Africa has the development objectives to increase electricity connectivity and trade in the Eastern Africa Power Pool and, for the Uganda–Tanzania interconnection, to increase electricity connectivity and trade between Uganda and Tanzania. Components of the Uganda: Uganda–Tanzania Interconnector Project (UTIP) include: Component 1, Construction of the Wobulenzi–Masaka–Mutukula 400 kilovolt double circuit transmission line and associated substations at Wobulenzi (extension) and Masaka (new), creating a high-capacity cross-border corridor with about 1,000 megawatt transfer capability to strengthen reliability, evacuate surplus hydropower, and enable regional exchanges; Component 2, Environment and Social risk mitigation, financing implementation of environmental and social instruments including the Environmental and Social Management Plan, biodiversity offsets, the Resettlement Action Plan and the Livelihood Restoration and Assistance Plan, alongside measures to manage labor influx and sexual exploitation and abuse/sexual harassment risks; Component 3, Project implementation and institutional support, covering detailed design, Owner’s Engineer and Project Implementation Unit support, operational expenses, targeted capacity building on climate mitigation and adaptation and on the Gender Action Plan, acquisition of selected training equipment for energy sector training facilities, and oversight and coordination by the Ministry of Energy and Mineral Development, including intergovernmental and inter-utility engagements, environmental and social oversight, land acquisition and grievance redress mechanisms. Components of the Regional Power Trade and Market Project include: Component 1, EAPP Regional Market and Trade Strengthening, providing post–go-live support for the regional day-ahead market, development of a regional transmission pricing methodology, market performance review in the first year of live trading, and operational strengthening of the independent Market Operator (MO); Component 2, Regional Grid Operations Support, updating the EAPP Interconnection Code, developing operating guidelines including third-party access, climate resilience and cybersecurity standards, supporting efficient control area operations and coordinated operational planning, and delivering system operator training and certification; Component 3, Planning and Priority Infrastructure Development, with Sub-components 3.1 Regional Planning Support to develop and pilot a regional power system data platform and strengthen planning data governance, Sub-component 3.2 Priority Regional Project Development to prepare upstream analytical and preparatory studies for priority regional interconnectors and national reinforcements that relieve cross-border flow constraints with climate resilience integrated in designs, and Sub-component 3.3 Support for Upstream Development of Transmission Public–Private Partnership projects to scope, pre-feasibility, and structure national or cross-border independent transmission projects using project finance principles; Component 4, Institutional Strengthening of the EAPP General Secretariat and Regional Coordination, with Sub-component 4.1 to finance the Project Implementation Unit and strengthen transparency through annual reports with audited financial statements, website updates, a resource mobilization strategy and a multi-year budgeting framework with a balanced scorecard, Sub-component 4.2 to convene regional dialogue and stakeholder outreach including an EAPP–SAPP coordination forum, and Sub-component 4.3 Women’s leadership advancement through an EAPP Women’s Leadership Advancement Program and related mentorship for women professionals; Component 5, Regional Regulatory Strengthening for the Independent Regulatory Body (IRB), with Sub-component 5.1 to embed regulatory expertise and develop rules and procedures, Sub-component 5.2 to establish market surveillance, investigations, transparency guidelines and third-party access frameworks and to review market instruments, Sub-component 5.3 to harmonize national regulatory frameworks supporting private sector participation in transmission and competitive market participation, and Sub-component 5.4 to establish a regional regulatory capacity development program with a host institution and implement specialized courses.