The world’s 26 poorest countries are in the worst financial condition since 2006, with rising debt levels and increased vulnerability to natural disasters, according to a new World Bank report. The report, released on Sunday, highlights the stark contrast between these low-income nations and the rest of the world, which has largely rebounded from the COVID-19 pandemic.
The report found that per capita income in the poorest economies has fallen by an average of 14 percent between 2020 and 2024 due to the pandemic and other crises. This significant drop in income has left these nations poorer than they were before the pandemic, with far-reaching consequences for their development. While the global economy has begun to recover, the World Bank noted that the poorest countries are still struggling to regain their footing.
To meet critical development goals by 2030, the World Bank estimates that these nations will need an additional 8 percent of gross domestic product (GDP) in annual investment, double the average investment of the past decade. However, despite this pressing need, net official development assistance as a share of GDP has dropped to a 21-year low, falling to 7 percent in 2022. This decline in assistance has further strained the capacity of these nations to address their growing challenges.
Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics, emphasized the role of the International Development Association (IDA) in providing crucial support to these low-income countries. “At a time when much of the world simply backed away from the poorest countries, IDA has been their main lifeline,” Gill said. He noted that IDA has been instrumental in job creation, education, healthcare improvement, and providing access to electricity and safe drinking water. However, he warned that these countries will need to significantly accelerate investment to break out of their current state of chronic emergency.
The report also revealed that low-income economies are disproportionately affected by natural disasters, suffering average annual losses equivalent to 2 percent of GDP between 2011 and 2023. This is five times the losses experienced by lower-middle-income countries. Furthermore, the cost of adapting to climate change is five times higher for these nations, amounting to 3.5 percent of GDP annually.
Ayhan Kose, the World Bank’s deputy chief economist, called for greater international cooperation to help these economies recover. He also emphasized the need for structural reforms to broaden tax bases and improve public spending efficiency, alongside increased support for IDA.
