Global Shocks Unfolding: Lessons from Fragile and Conflict-affected States

IMF Working Papers, October 4, 2024

Source details

Canonical URL: Global Shocks Unfolding: Lessons from Fragile and Conflict-affected States

Authors: Jocelyn Boussard, Chiara Castrovillari, Tomohide Mineyama, Marta Spinella, Bilal Tabti, Maxwell Tuuli
Published: October 4, 2024
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9798400290824.001

Investigates consequences of global shocks on a sample of low- and lower-middle-income countries, with a particular focus on fragile and conflict-affected states (FCS).
Defines FCS as countries that display institutional weakness and/or are negatively affected by active conflict, thereby facing challenges in macroeconomic policy management.
Examines global shocks associated with commodity prices, external demand, and financing conditions.

FCS economies are more vulnerable to global shocks compared to non-FCS peers.
The higher sensitivity of FCS economies is mainly driven by procyclical fiscal responses.
Procyclical fiscal responses are aggravated by:
- lack of effective spending controls, and
- lack of timely access to financial sources.
External financing serves as a source of stability and partially mitigates the adverse impact of global shocks.
Conditions of fragility, which are on the rise in many parts of the world, can amplify the effects of negative exogenous shocks.
Underlying sources of vulnerabilities are diverse and span:
- fiscal buffers,
- external buffers,
- institutional quality, and
- economic structure.
Lessons are applicable to a broader set of countries beyond the FCS sample.

Efficient and timely external financial support from external partners, including international financial institutions, should help countries’ counter-cyclical responses to mitigate adverse shocks and achieve macroeconomic stability.
Strengthening spending controls and improving timely access to financial sources are implied priorities to reduce procyclicality and vulnerability.

Authors: Jocelyn Boussard, Chiara Castrovillari, Chiara Castrovillari, Tomohide Mineyama, Marta Spinella, Bilal Tabti, Maxwell Tuuli
Date: October 4, 2024
Pages: 40
Volume: 2024
Issue: 214
Series: Working Paper No. 2024/214
DOI: https://doi.org/10.5089/9798400290824.001
Stock No: WPIEA2024214
ISBN: 9798400290824
ISSN: 1018-5941
Subject: Commodities, Commodity price fluctuations, Commodity prices, Exports, International trade, Prices, Technology, Technology transfer
Keywords: Commodity price fluctuations, Commodity prices, Commodity tot shock, decline shock, Exports, external financing, FCS economy, FCS list, FCS peer, Fragile and conflict-affected states (FCS), Global, Global shocks, IMF working papers, low-income countries, shock variable, Sub-Saharan Africa, Technology transfer

Source: IMF Working Papers — "Global Shocks Unfolding: Lessons from Fragile and Conflict-affected States", October 4, 2024.