• Conflict and instability are taking a devastating toll on 39 economies afflicted by them, driving up extreme poverty faster than anywhere else, intensifying acute hunger, and pushing several key development goals farther out of reach.

• This was revealed in the World Bank’s first comprehensive assessment of their plight in the aftermath of COVID-19.

• The new study underscores why the global goal of ending extreme poverty has been unattainable so far.

Key points of the report:

• The 39 economies currently classified as fragile and conflict-affected situations (FCS) are home to more than one billion people. Although they are found in all regions, FCS economies are concentrated in Sub-Saharan Africa, East Asia and Pacific, and the Middle East and North Africa. 

• These economies, which range from the Marshall Islands in the Pacific to Mozambique in sub-Saharan Africa, are constrained by deep, intertwined obstacles — most prominently, severe institutional weakness and armed conflict. 

• The majority are heavily reliant on commodity exports, leaving them exposed to swings in commodity prices. 

• Many are geographically remote with limited connectivity, limiting their access to global markets, and are highly vulnerable to climate-related disasters. 

• Economies in FCS are burdened by weak institutions and are particularly vulnerable to overlapping shocks — including conflict, natural disasters, commodity price swings, and global downturns. 

• Nearly three-quarters of FCS economies have remained classified as such for over a decade, highlighting the persistence of their challenges and underlying fragility. 

• Limited fiscal space further constrains these economies from responding to shocks and investing in essential services such as education, health, and infrastructure.

• Conflict is surging, and its effects are devastating. On a five-year basis, the frequency and lethality of conflicts have more than tripled since the early 2000s. 

• Beyond the immense human toll, the economic impact is staggering: high-intensity conflicts are typically followed by a cumulative drop of about 20 per cent in GDP per capita after five years, relative to pre-conflict projections.

• Nearly 40 per cent of the population of FCS economies lives in extreme poverty. By 2030, these economies are projected to account for nearly 60 per cent of the world’s extreme poor, up from 50 per cent in 2024. 

• They also bear a growing burden of hunger: around 200 million people — nearly one in five — now face acute food insecurity.

• FCS economies have become the epicenter of global poverty and food insecurity, a situation increasingly shaped by the frequency and intensity of conflict. 

• Progress on poverty reduction has stalled since the mid-2010s, reflecting the compounded effects of intensifying conflict, economic fragility, and subdued growth.

• Unlike other developing economies, economies struggling with conflict or instability have been unable to create enough jobs on average to keep pace with population growth. 

• In 2022, the latest year for which such data are available, more than 270 million people were of working age in these economies, but barely half of them were employed.

• Life expectancy in FCS economies is seven years shorter and infant mortality is more than double the rate in other developing countries. On average, children receive just six years of schooling, and learning poverty remains widespread. Health systems are under severe strain, further weakened by conflict-related disruptions.

• Repeated shocks and sluggish growth have contributed to rising debt vulnerabilities in FCS economies. Around 70 per cent are now in or at high risk of debt distress. 

FCS economies hold untapped potential for growth

• However, these economies also possess considerable untapped potential, including abundant natural resources, expanding working-age populations, and — once peace is established — promising prospects for tourism.

• With tailored policies and sustained international support, policy makers in FCS economies can prevent conflict, strengthen governance, accelerate growth, and create jobs — laying the foundation for more resilient and inclusive development. 

• Some resource-rich FCS economies are well placed to benefit from growing demand for critical minerals. Unlocking these opportunities will require FCS economies to have stronger governance, capable institutions, and scaled-up investment.

• Targeted assistance — including concessional financing, debt relief, and investments in state capacity and governance — will be crucial.

• Equally important are efforts to expand access to quality education, healthcare, and infrastructure, and promote private sector development to meet the needs of growing working-age populations.

• Continued international support — through concessional finance, debt relief, and technical assistance — will be vital to foster peacebuilding, build resilience, and advance inclusive development. 

• With sound policies and sustained global engagement, FCS economies can chart a better path toward development.

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