According to a new report from the World Bank, the world's 26 poorest countries are experiencing a significant increase in debt, reaching levels not seen since 2006. These nations are now more vulnerable to natural disasters and economic shocks than before the COVID-19 pandemic.
The report highlights that per capita income in these economies fell by an average of 14 percent between 2020 and 2024 due to the pandemic and subsequent crises. To achieve essential development goals, these countries will require additional annual investment equivalent to 8 percent of their gross domestic product (GDP) through 2030, which is double the average investment of the last decade.
Despite the pressing need for increased assistance, the report notes that net official development assistance as a share of GDP has dropped to a 21-year low of 7 percent in 2022. Indermit Gill, the World Bank Group's chief economist, emphasized that the International Development Association (IDA) has been crucial in supporting these economies during challenging times.
Furthermore, the report reveals that low-income countries are disproportionately affected by natural disasters, with average annual losses amounting to 2 percent of GDP between 2011 and 2023, significantly higher than losses in lower-middle-income countries. Adapting to climate change is also notably more costly for these nations, estimated at 3.5 percent of GDP annually.
Ayhan Kose, the World Bank's deputy chief economist, pointed out that while these countries can take measures to improve their economic situations, they will also require increased support from wealthier nations to foster international cooperation on trade and investment.