To weather the shock, policymakers should ensure that any near-term measures are time-bound and targeted at the most vulnerable, and maintain the focus on medium-term development objectives
Countries face vastly different exposure to higher oil prices and supply uncertainty, shaped by whether they import or export, and how much policy space they have to respond
Impact on economic activity will vary across countries, but inflation will rise for all
The region must respond to energy shocks through disciplined policies that protect the vulnerable and strengthen resilience
The Middle East conflict halted growth momentum. The right policies and stronger global cooperation are needed to contain the damage.
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The region can best cope by protecting vulnerable people, letting prices adjust, anchoring inflation expectations, and accelerating structural reforms
Risks have risen as financial conditions tightened, with key vulnerabilities ahead
Markets have been broadly orderly so far—but financial stability risks are elevated
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Diversification has become harder since 2020 as stocks and bonds tend to move in tandem during sharp selloffs, adding to financial stability concerns
Policymakers should strengthen oversight of nonbank financial intermediaries, whose increasing interconnectedness with banks could exacerbate adverse shocks
Policymakers should broaden central clearing and monitor market-making, including by nonbank financial institutions, while dealers must continue to build resilience
Amid heightened uncertainty, policymakers will need to deal with complex trade-offs between debt, slower growth, and new spending pressures
Middle East conflict intensifies global uncertainty at a time of strained public finances, underscoring the need for policies that preserve future stability
Spending more efficiently and reallocating public funds toward investment and innovation can be a powerful growth strategy
Prudent anchors, corrective mechanisms, and supportive institutions can help countries comply with their fiscal rules and commit to sound public finances
Public approval is crucial for carrying out difficult reforms that can help countries lower debt and increase growth
The increase in debt in the last decade points to the need for lowering deficits, rebuilding space to deal with shocks, and strengthening fiscal rules
Policy choices will determine whether workers and firms are adequately prepared for the AI revolution
Artificial intelligence could boost Europe’s productivity, but gains will hinge on efforts to deepen the single market and the calibration of regulation
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The power-hungry technology requires policies to help expand electricity supplies, incentivize alternative sources, and help contain price surges
Some countries risk missing out on the full economic benefits of AI, but more formal jobs and expanded digital access can help
New generative AI tools can redefine the relationship between governments and citizens, but strong leadership and safeguards are fundamental.
