Worlds poorest countries face more economic decline

Introduction

A World Bank report which looked into the economic growth of vulnerable economies around the world has found that its getting from bad to worse. Although these struggling economies are blessed with large human and natural resources, their various economies have deteriorated ever since after COVID. The poverty level and standard of living in such places are not better that they were 4 years ago. The world needs to come to the rescue of these vulnerable economies.

This is a review of key metrics in a report presented by the World bank to show how vulnerable economies are still declining. Beyond just stating a problem and backing it with figures, this review will look at strategic recommendations from the World Bank that are aimed at stopping the economic reversal in worlds poorest countries. Beyond that, the recommendations should position these vulnerable countries for a sustained growth in years ahead.

Vulnerable countries and bleak figures

The most vulnerable countries are simply the poorest economies of the world. These countries face economic challenges in large scale ranging from poor infrastructure, unemployment, insecurity, and much more. It is interesting to note that a significant number of the worlds populations live in vulnerable economies - close to 2 billion people. This number of people are found in a combined 75 countries of the world.

Because of their key role in the world economy, the World bank has taken up the responsibility of supporting those ailing economies mainly by mean of its International Development Association (IDA). Through the IDA, these vulnerable economies might receive assistance in from of loans with very little or no interest. They may also qualify for grants which provide the funding to invest in strategic sectors of the economy such as in education and health.

To fully grasp the economic challenges facing these poor countries, it is best to put out some figures or stats that makes for sad reading. Check out some of them below:

Over 2020-24, average per capita incomes in half of IDA countries—the largest share since the start of this century—have been growing more slowly than those of wealthy economies. One out of three IDA countries is poorer, on average, than it was on the eve of the COVID-19 pandemic. The extreme-poverty rate is more than eight times the average in the rest of the world: one in four people in IDA countries struggles on less than $2.15 a day. source

From the above, it is obvious that poor countries have felt bad economically since after COVID. Living on barely $2 per day shows how much basic necessities of life people in such countries lack. And there are many in the category of the poorest that cannot even earn up to $2 per day.

So basically, worlds most vulnerable countries have had a terrible economic reversal since 4 years now. These countries have sunk into more debt, struggles with poor infrastructure, inequality, high crime rates and several other economic problems. The world bank believes that there is hope and a lot could be done to address this economic reversal. And that is the very essence of the report that has brought this situation into sharp focus.

Pursing growth from what is available

Vulnerable economies are often blessed with resources that could be tapped into or developed further to strengthen the economy. In other words, fighting this economic reversal could and should begin with utilizing resources available in these countries. Often times, vulnerable economies own more of these resources than one. Consider a few of them:

• Large youth population: Most vulnerable economies often have a large population. Not just a large population, but one that has a high number of young people in them. This youth population is a huge resources that could be harnessed properly for economic growth. For example, a vibrant youth population should be able to keep the workforce well sustained over years. Retiring workers in the job sector will always have proper and suitable young people to replace them. Industrialization for example is only possible when there is a large number of young people who are working in various industries and sectors.

Besides being a source of regular source of labor, youths are also ready to become entrepreneurs. Many vulnerable economies have a large number of small businesses that are often managed by young people and this also helps the growth of such economies.

• Natural resources: Another attribute of vulnerable economies is the presence of natural resources. This is a huge asset. These natural resources are needed by users and companies around the world to operate. For example, some vulnerable economies in Africa are blessed with crude oil, gold, copper, agricultural produce and many other resources. These resources could provide a useful channel for foreign exchange which in turn should be reinvested to grow various aspects of the economy.

Natural resources also creates employment opportunities. That is another value that it could provide to vulnerable economies. A large number of the working population in such countries could be gainfully employed in sectors where natural resources are extracted, processed or converted into finished goods.

So the World bank feels that vulnerable economies have some of what it takes to build and sustain a vibrant economy. The two examples above demonstrate that it is possible to arrest the current economic reversal starting by utilizing the resources available in those countries.

What the IDA thinks should be done

Through the IDA, the World bank believes that more is necessary and could be done to help vulnerable economies achieve economic reversal and sustain growth. Consider the two recommendations below:

• Government policies should be reviewed: The IDA recommends that government policies across all sectors in vulnerable economies needs to be revisited. The aim is create policies that promote and sustain economic growth. Currently, some government policies are the major challenge in some sectors. So when policies are made with a goal to improving economic prospects of the population, then growth could be achieved over time.

• Foreign Investment encouraged: Another way to assist ailing economies is through investment from outside the economy. Hence, the IDA is calling all better economies to explore investment opportunities in struggling economies with the aim of contributing to their national economic growth. Also, international trade is essential to bringing in foreign exchange into such economies. When these are done, vulnerable economies are helped so much to overcome the current state of decline starring them in face.

Finally

The World Bank has made a comprehensive report of the above issue and you might want to read more in the links at the end of this review. All hands could and should be on deck to assist vulnerable economies to recover from this downward spiral. Its all good for the benefit of the global economy as well.

If you are interested to read further on this subject, check out the World bank article from where this review was made:

• Despite High Potential, 75 Vulnerable Economies Face ‘Historic Reversal’
• The Great Reversal Prospects, Risks, and Policies in International Development Association (IDA) Countries

Note: Thumbnail is mine.

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