IMF Blog,update

 

Dear MARIA, We just published a new Chart of the Week blog—read the full text below. How to Spur Economic Growth in Africa’s Fragile and Conflict-Affected States (Credit: IMF Photo/Ebunoluwa Akinbo)  By Wenjie Chen, Michele Fornino, Hamza Mighri, Can Sever  More than half of sub-Saharan Africa’s population lives in fragile and conflict-affected states (FCS)—economies that face profound challenges such as stagnant economic growth, weak institutions, inadequate public services, extreme poverty, war, and forced internal displacement.   Some countries have transitioned out of extreme fragility by implementing sound macroeconomic policies, diversifying the economy, and strengthening institutions. However, as we explain in our analytical note in the IMF’s Regional Economic Outlook for sub-Saharan Africa, recovering from the successive shocks of recent years is likely to be difficult for many FCS, faced with erratic growth, political instability, exposure to natural disasters, and heavy resource dependency.     Fragility carries a stark human cost. With strained budgets, vast development needs, and insufficient funding, fragile states in the region consistently rank at the bottom of global development indicators. Life expectancy lingers at 60 years, poverty rates are twice as high as in non-FCS in the region, and elementary school completion rates remain among the lowest globally. If current trends continue, by 2030 two-thirds of the world’s extreme poor will live in fragile states, with sub-Saharan Africa at the epicenter.     Many fragile states struggle to sustain the bursts of faster growth needed to escape poverty. As the Chart of the Week shows, while non-FCS economies in sub-Saharan Africa managed to keep growing after the pandemic—albeit more slowly than previously forecast—fragile states in the region haven’t been able to regain lost ground, with inflation-adjusted income per person still, on average, below its 2019 level. When FCS suffer a downturn, they lose revenue and have limited access to affordable financing, forcing them to cut expenditures more sharply than in non-FCS. This results in a relatively longer and deeper fiscal contraction, exacerbating the initial shock, as shown in a recent IMF working paper.   Fragility is more than a lack of institutional capability and armed conflict: it often reflects deeper political and economic forces that make recovery elusive. Restricted access to international financial markets, weaker institutions, and limited entrepreneurship in fragile states result in significantly smaller private sector contributions to the economy and fewer employment opportunities compared with other countries.     However, some fragile states have managed to break free by focusing on participatory governance, institutional reform, and economic diversification. Countries that curb corruption, strengthen institutions, and promote political participation are more likely to mitigate fragility, according to our analysis of past cases based on a machine learning approach.     Indeed, past lessons offer hope. After its 2002 civil war, Sierra Leone sought to prioritize rebuilding infrastructure and public services in education and health care, while Liberia, after four years of civil war ended in 2003, strengthened core institutions and reduced reliance on extractive industries. Both nations used pivotal moments to reset societal expectations, rebuild trust, and set a new course.   Employment and income   FCS in the region are simultaneously major sources of refugees and key hosts. Despite the acute challenges and constraints, several FCS (Cameroon, Chad, Ethiopia, Niger, among others) have implemented innovative refugee policies, such as granting refugees free movement, work permits, and access to public services. While these measures require up-front investments and administrative capacity, well-designed refugee integration strategies can boost employment and income for both the host country and the refugees.    The transition toward sustained growth and resilience is a long-term process requiring perseverance and adaptability, not a quick fix. No single policy guarantees success. Instead, states that focus on a package of measures to build inclusive institutions, maintain economic stability, and seize key opportunities for reform are far more likely to succeed. In line with the Fund’s Strategy for Fragile and Conflict-Affected States (FCS), our policy recommendations include:   Restoring macroeconomic stability by strengthening fiscal institutions and improving public financial management.   Rebuilding trust by improving governance and ensuring that revenues—particularly from natural resources—are managed responsibly.   Creating opportunities for broader public engagement and ensuring a fairer allocation of resources to ultimately strengthen social unity and resilience. Forming long-term partnerships with international partners, including donors, can help support capacity building, financing social programs, and mitigating the impact of economic shocks— ensuring that fragility does not escalate into a global crisis.   —This blog is based on an analytical note for the IMF’s Regional Economic Outlook for Sub-Saharan Africa authored by Wenjie Chen, Michele Fornino, Vidhi Maheshwari, Hamza Mighri, Annalaura Sacco, and Can Sever. For more, see the IMF’s strategy for fragile and conflict-affected states.   Read the blog Recent blogs A United Europe Can Shape the Global Economy   The European Union must unite to shape today’s global economy, rather than be shaped by it Debt is Higher and Rising Faster in 80 Percent of Global Economy   Fiscal Policy under mounting uncertainty means government budgets need resilience—particularly in countries whose economic weight makes them influence global trends Fostering Core Government Bond Market Resilience Policymakers should broaden central clearing and monitor market-making, including by nonbank financial institutions, while dealers must continue to build resilience Thanks again for your interest in the IMF Blog—and please feel free to share your thoughts. We’d be happy to hear from you.   Jeff Kearns  Managing Editor | IMF Blog  jkearns@imf.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431