Despite their significant raw material potential and a growing young working population, more than half of the 75 poorest countries saw their GDP per capita grow at a slower rate than rich countries in 2023/24, widening inequalities between countries, according to the World Bank.
For a third of them, GDP per capita is now lower than it was before the Covid-19 pandemic, according to a report released today by the World Bank on countries that tend to benefit from grants or low-interest loans – that is, with very favorable terms – from the International Development Association (IDA), a branch of the World Bank.
“The prosperity of these countries is essential to the long-term prosperity of the planet. Three current economic powerhouses, China, India and South Korea, were countries that benefited from IDA loans,” World Bank Chief Economist Intermit Gill said in a statement.
“All three have succeeded in developing to eradicate extreme poverty and improve living conditions. With international assistance, IDA-funded countries today have the potential to do the same,” he added.
In some countries the situation is more critical, with an average extreme poverty rate eight times the global average. Almost 25% of the population lives there on less than $2.15 a day, and 90% of people facing famine or malnutrition are concentrated in these countries, mostly in sub-Saharan Africa as well as east or south Asia.
In order to help them get out of their current economic situation, the report mainly proposes the strengthening of international financial institutions but also cooperation on major global issues, such as climate change, which particularly affects these countries, as well as a significant increase in financial support.
Aid to developing countries, particularly those in, or at risk of, debt crisis, will be among the main topics of discussion at the annual meetings of the International Monetary Fund and the World Bank, being held this week in Washington.
The necessary public spending to support economies in the face of the pandemic and subsequent shocks caused by global inflation, or even the war in Ukraine, pushed states into debt at a time when interest rates were rising, driven by central banks of the largest economies, which are fighting inflation.
A combination that resulted in a significant increase in debt service in some countries, which were forced in some cases to use more than half of their budget.
Source: RES-MPE
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