The Iran war highlights the need for more aid to social protection

Social protection ODA to Southeast Asia remains steady, but the mix has moved against the poorest countries. In an era of cascading shocks, this will test resilience where it is already weakest

The food and fuel price shocks of early 2026 have had profound impacts on households and consumers in Southeast Asia. The United Nations Development Programme estimates that 8.8 million people in the Asia-Pacific region may be pushed into poverty because of military escalation in the Middle East.¹ The Iran war has also threatened flows of remittances into Southeast Asia from Middle East-based labourers, primarily affecting the Philippines, where personal remittances were equivalent to 8.7% of GDP in 2024.² Thailand supplies more than 77% of Cambodia’s incoming remittances,³ but after the border conflict drove 900,000 migrant workers home, those flows are expected to contract by more than a quarter.⁴ Rising costs for basic goods and falling supplementary incomes have imperilled the region’s poorest households and increased pressure on social protection systems.

Social protection is integral to addressing inequality, and ASEAN declarations emphasise the importance of safety nets for vulnerable groups.⁵ But there is a clear gap between intent and reality. The International Labour Organization (ILO) puts social protection spending in Southeast Asia at 1.9% of GDP against a global average of 19.3%, with coverage reaching 35.7% of the population, compared with 47% globally.⁶

Development partners have recognised the value of social protection systems in building resilience to shocks. Since 2015, the sector has accounted for 1% of ODA to the region, rising to 1.4% since 2020 — a shift driven by large-scale policy loans from MDBs in response to Covid. In 2024, the share reached 1.76%, more than double the global average of 0.8%, according to OECD data.

Social protection ODF is concentrated in the lower-middle-income states, with the Philippines alone receiving half of the regional total in 2024, mostly as non-concessional loans.⁷ On an ODA basis, however, the region’s four least-developed countries (Cambodia, Laos, Myanmar, and Timor-Leste) received almost half of social protection spending between 2015 and 2024 — well above their 37.5% share of total ODA to Southeast Asia, indicating a particular donor focus on social protection in these countries.

Southeast Asian development experts have identified national resilience systems, including social protection, as the most useful way international partners could support the region through the impacts of the Iran war.⁸ Yet despite an overall increase in social protection spending in 2024, funding to the region’s four least-developed countries fell markedly, adding pressure to systems that were already stretched.