The World Bank’s latest report reveals a troubling trend: half of the world’s 75 poorest countries are experiencing a widening income gap with the wealthiest economies, marking a historical reversal in development progress.
This alarming shift underscores the urgent need for ambitious policy reforms and increased international support to prevent a lost decade of development.
Widening Income Gap
Per capita income growth in the poorest countries has diverged from that of the richest economies over the past five years, leading to a concerning structural regression.
For the first time this century, there is no convergence in income levels between the poorest and wealthiest nations, indicating a significant setback in global development efforts.
Risk of Lost Decade
The report warns that the 75 countries eligible for assistance from the International Development Association (IDA) are at risk of experiencing a lost decade of development without decisive policy shifts and substantial international aid.
Factors such as Russia’s invasion of Ukraine, climate change, and increasing violence and conflict further exacerbate the challenges faced by these countries.
Impact on IDA Countries
More than half of all IDA countries are located in sub-Saharan Africa, with others in East Asia and Latin America.
Despite youthful populations and rich natural resources, many IDA countries are struggling with debt distress, insufficient access to food, and declining economic prospects.
Concerns and Warnings:
- Concerns have been raised about the worsening situation in low-income countries, with warnings against free-riding by emerging official creditors.
- External public debt outflows have increased, posing significant challenges to debt sustainability and economic stability.
Policy Recommendations
The World Bank emphasizes the need for ambitious policy reforms to accelerate investment and economic growth in IDA countries.
Stronger international coordination on climate change, debt restructuring, and trade support is essential to mitigate the risks of prolonged stagnation.
Call for Global Support:
- The report underscores the importance of robust financial support from the global community to address the needs of IDA countries.
- Drawing parallels with successful development stories like China, India, and South Korea, the World Bank emphasizes the potential for progress and the imperative to support vulnerable nations.
The World Bank’s report serves as a wake-up call, highlighting the urgent need for coordinated action to reverse the widening income gap and prevent a lost decade of development in the world’s poorest countries.
By prioritizing ambitious policy reforms and increased international support, the global community can pave the way for sustainable development and economic prosperity for all.
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