The report “Fragile and Conflict-Affected Situations: Intertwined Crises, Multiple Vulnerabilities” is part of the World Bank’s Global Economic Prospects, June 2025. It was prepared by Samuel Hill, Jeetendra Khadan, and Peter Selcuk, with contributions from other members of the World Bank’s Prospects Group. The text reflects the collective expertise of economists with backgrounds in institutions such as the IMF, Asian Development Bank, and Inter-American Development Bank. While authored by World Bank staff, the analysis represents their professional findings and not necessarily the official stance of the institution or its Executive Directors
The methodology combines a broad analytical framework and empirical research tools to capture the dynamics of fragile and conflict-affected situations (FCS). The report showcases the economic, social, and institutional characteristics of 39 emerging market and developing economies (EMDEs) concentrated in Africa, East Asia and Pacific, and the Middle East, currently classified as FCS. The authors employed event studies, counterfactual analyses, and panel econometric models to evaluate the costs of conflict on GDP growth and human development. Their objectives are threefold: to identify key features of FCS economies, to estimate the scale of economic and social losses from conflict, and to outline policy priorities and opportunities for growth. Importantly, the report combines earlier World Bank research, integrating lessons from the COVID-19 pandemic, rising global conflict, and recent case studies of post-conflict recovery.
The findings are sobering. FCS economies display low and volatile growth, heavy dependence on commodities, weak fiscal capacity, and widespread poverty. Around 40 percent of their populations live in extreme poverty, and by 2030 they are projected to account for 60 percent of the world’s poorest people. Food insecurity affects 200 million individuals in these settings, far higher than in other developing economies. Human capital outcomes are equally bleak: life expectancy is seven years shorter, and infant mortality twice as high compared to peers. Conflict is identified as a central driver of economic collapse: high-intensity conflicts typically reduce per capita GDP by 20 percent within five years, while a one percent increase in conflict-related fatalities per million population leads to a 3.7 percent drop in per capita GDP. At the same time, repeated shocks—from the COVID-19 pandemic to climate-related disasters—have left about 70 percent of these economies in or at high risk of debt distress. Yet, opportunities remain in their youthful demographics, natural resource endowments, and tourism potential, provided institutions and governance can be strengthened.
The report concludes with a call for urgent domestic reforms and sustained international engagement. Policy recommendations focus on conflict prevention through early warning systems, inclusive development, and resilience-building. Governments in FCS economies are urged to safeguard essential services, preserve institutions during crises, and invest in human capital and infrastructure. The authors highlight lessons from post-conflict recoveries in Rwanda, Nepal, Sri Lanka, Cambodia, and Bosnia, where reintegration, social investment, and governance reforms fostered stability. On the international front, concessional financing, debt relief, technical assistance, and humanitarian access are seen as indispensable to peacebuilding and economic recovery. With coordinated domestic action and global support, the authors argue, FCS economies can unlock growth potential, reduce poverty, and move toward sustainable, inclusive development.
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