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World Bank urges aid for economies in conflict as US pushes cuts
Published by Global Banking & Finance Review®
Posted on June 27, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on June 27, 2025
3 min readLast updated: January 23, 2026
The World Bank urges increased support for conflict-affected economies facing rising poverty and instability, highlighting the need for global engagement.
By Rodrigo Campos
(Reuters) -The goal of ending extreme poverty around the globe remains elusive partly due to compounding challenges faced by economies in fragile and conflict-affected situations (FCS) including food insecurity and weak government capacity, a report from the World Bank showed.
The report released on Friday by the Washington-based lender calls on a scaling up of international support, debt relief and technical assistance at a time when the United States, the world's largest aid donor of the past decades, steps back.
Extreme poverty is rising fast in economies hit by conflict and instability, according to the World Bank's first comprehensive report on FCS economies since the COVID-19 pandemic.
Over 420 million people in conflict-ridden economies survive on less than $3 a day, more than the rest of the world combined, even as they are home to under 15% of the global population. The number is projected to rise to 435 million, or nearly 60% of the world’s extreme poor, by 2030.
"FCS economies have become the epicenter of global poverty and food insecurity, a situation increasingly shaped by the frequency and intensity of conflict," the World Bank report said.
Economic output in FCS nations could stall or weaken further as conflict and violence have surged and intensified over the past years. The most high-intensity conflicts can shrink per capita GDP by some 20% after five years, according to the report.
Conflict and war economies are home to 1 billion people and their populations average only six years of schooling, with life expectancy seven years shorter than in other developing countries. Since 2020, the per capita GDP in these economies has shrunk by an average of 1.8% per year, while it has expanded by 2.9% in other developing economies, the report said.
“Progress on poverty reduction has stalled since the mid-2010s, reflecting the compounded effects of intensifying conflict, economic fragility, and subdued growth,” it said.
Targeted domestic reforms and coordinated, long-term global engagement are needed to lift those populations out of poverty, according to the World Bank.
Measures need to focus on addressing root causes of conflict such as injustice and exclusion, as well as expanding access to education and healthcare, and improving infrastructure. Investment in tourism and agriculture could help create jobs for a growing working-age population.
"With sound policies and sustained global engagement, FCS economies can chart a better path toward development," said the World Bank.
(Reporting by Rodrigo Campos in New York; Editing by Andrea Ricci)
The report indicates that extreme poverty is rising rapidly in economies affected by conflict, with over 420 million people living on less than $3 a day.
The World Bank recommends scaling up international support, debt relief, and technical assistance to help conflict-affected economies.
The report states that economic output in fragile and conflict-affected nations could stall or weaken further due to the surge in conflict and violence.
Conflict and war economies are home to 1 billion people, with an average of only six years of schooling and a life expectancy seven years shorter than in other developing countries.
The World Bank suggests targeted domestic reforms and coordinated global engagement to address the root causes of conflict and improve access to education and healthcare.
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