Extreme Poverty Surges in Conflict-Affected Economies, World Bank Warns

Global Development Goals at Risk as Conflict and Instability Deepen Across 39 Economies

A new World Bank report released today paints a sobering picture: extreme poverty is rising fastest in the very places least equipped to fight it—countries crippled by conflict and instability. With development setbacks piling up and violence reaching its highest levels in 25 years, these fragile economies now account for the majority of the world’s extreme poor.

The report, the Bank’s first comprehensive post-COVID-19 assessment of conflict-affected and unstable economies, finds that these 39 countries are rapidly diverging from global development trends. Per capita GDP is shrinking, employment remains stagnant, food insecurity is worsening, and education outcomes are collapsing.

“More than 70% of those suffering from conflict and instability are Africans. Untreated, these conditions become chronic,” said Indermit Gill, Chief Economist of the World Bank Group. “Half of the countries facing conflict or instability today have been in such conditions for 15 years or more. Misery on this scale is inevitably contagious.”

A Widening Development Gap

Since 2020, economies afflicted by conflict or instability have experienced an average GDP per capita contraction of 1.8% annually, while other developing economies have grown by 2.9%. As a result, 421 million people in these countries now live on less than $3 a day—a number projected to climb to 435 million by 2030, representing nearly 60% of the world’s extreme poor.

By contrast, the extreme poverty rate in non-fragile developing economies has fallen to just 6%. In conflict-affected economies, it remains stubbornly high at nearly 40%. Meanwhile, job creation is failing to keep up with population growth—a devastating blow to countries with young, rapidly growing populations.

“Economic stagnation—rather than growth—has been the norm in these economies over the past decade and a half,” said M. Ayhan Kose, Deputy Chief Economist at the World Bank. “But it doesn’t have to be this way. We’ve seen that with targeted policies and stronger international support, countries can recover and even thrive.”

Conflict’s Lasting Toll

The frequency and lethality of conflicts have more than tripled since the early 2000s. The human and economic cost is staggering:

• Life expectancy is seven years lower than in other developing countries.

• Infant mortality rates are more than twice as high.

• 18% of the population suffers from acute food insecurity—18 times the rate seen elsewhere.

• 90% of school-aged children cannot meet minimum reading standards.

These are not short-term crises. Half of these economies have been trapped in conflict or instability for more than 15 years. High-intensity conflicts—defined as those with more than 150 deaths per million people—typically slash GDP per capita by 20% over five years.

The report stresses that prevention is cheaper than response. Real-time conflict early-warning systems, combined with efforts to reduce institutional fragility, can offer a lifeline before violence escalates.

Unlocking Growth in Fragile States

Despite their profound challenges, these economies are not without hope—or potential. The World Bank highlights three key assets that, if harnessed, could serve as the foundation for future growth:

1. Abundant Natural Resources

1. Natural resources represent 13% of GDP in these countries—three times the share in other developing economies. This includes critical minerals essential to the clean energy transition, such as cobalt, lithium, and rare earths.

1. A Youthful, Expanding Workforce

1. Unlike aging economies elsewhere, conflict-affected countries are projected to experience continued growth in working-age populations through 2055. By then, nearly two-thirds of their populations will be of working age.

1. Untapped Investment Potential

1. With the right mix of governance reform, infrastructure investment, and private sector development, these economies could ignite inclusive growth and harness a demographic dividend that fuels long-term prosperity.

However, realizing this potential requires urgent and coordinated action—by national governments, regional institutions, donors, and the private sector.

“This is a defining challenge of our time,” the report concludes. “Failing to address the development emergency in conflict-affected economies will not only derail global poverty reduction goals—it will threaten the stability of entire regions.”

For more on this topic, visit www.worldbank.org or follow updates from the World Bank’s Prospects Group.