World Bank urges aid for economies in conflict as US pushes cuts

The Star

27-06-2025

(Reuters) -The goal of ending extreme poverty around the globe remains elusive partly due to compounding challenges faced by economies in fragile and conflict-affected situations (FCS) including food insecurity and weak government capacity, a report from the World Bank showed.
The report released on Friday by the Washington-based lender calls on a scaling up of international support, debt relief and technical assistance at a time when the United States, the world's largest aid donor of the past decades, steps back.
Extreme poverty is rising fast in economies hit by conflict and instability, according to the World Bank's first comprehensive report on FCS economies since the COVID-19 pandemic.
Over 420 million people in conflict-ridden economies survive on less than $3 a day, more than the rest of the world combined, even as they are home to under 15% of the global population. The number is projected to rise to 435 million, or nearly 60% of the world's extreme poor, by 2030.
"FCS economies have become the epicenter of global poverty and food insecurity, a situation increasingly shaped by the frequency and intensity of conflict," the World Bank report said.
Economic output in FCS nations could stall or weaken further as conflict and violence have surged and intensified over the past years. The most high-intensity conflicts can shrink per capita GDP by some 20% after five years, according to the report.
Conflict and war economies are home to 1 billion people and their populations average only six years of schooling, with life expectancy seven years shorter than in other developing countries. Since 2020, the per capita GDP in these economies has shrunk by an average of 1.8% per year, while it has expanded by 2.9% in other developing economies, the report said.
'Progress on poverty reduction has stalled since the mid-2010s, reflecting the compounded effects of intensifying conflict, economic fragility, and subdued growth,' it said.
Targeted domestic reforms and coordinated, long-term global engagement are needed to lift those populations out of poverty, according to the World Bank.
Measures need to focus on addressing root causes of conflict such as injustice and exclusion, as well as expanding access to education and healthcare, and improving infrastructure. Investment in tourism and agriculture could help create jobs for a growing working-age population.
"With sound policies and sustained global engagement, FCS economies can chart a better path toward development," said the World Bank.
(Reporting by Rodrigo Campos in New York; Editing by Andrea Ricci)