Climate Change

Owing to its ample natural endowments, independent institutions, and strong monetary policy framework, South Africa’s economy has proven resilient to renewed global turbulence related to greater protectionism, fragmentation, and heightened policy uncertainty in 2025. However, long-standing impediments—entrenched structural rigidities, inadequate infrastructure, governance weaknesses, and rising public debt—continue to constrain the economy’s ability to create much needed jobs and achieve its true growth potential.

Côte d’Ivoire’s economy continues to show resilience, supported by the restoration of fiscal and external buffers. The EFF/ECF-supported program approved in May 2023 (400 percent of quota) has largely eliminated macroeconomic imbalances and safeguarded a moderate risk of debt distress. Important measures have been taken under the RSF arrangement (150 percent of quota) to contribute to prospective balance of payments stability and tackle challenges from climate change and to meet the country’s ambitious adaptation and mitigation objectives. The authorities’ reform commitments under both programs support Côte d’Ivoire’s efforts to pursue economic transformation to upper-middle income status over the medium term. The outlook remains favorable, supported by sustained consumption and investment, as well as a further expansion of the hydrocarbon and mining sectors, and innovative financing instruments reflecting strong investor confidence. Risks remain broadly balanced amid persistent global uncertainty.

Selected Issues

State-owned enterprises (SOEs) remain a cornerstone of Kazakhstan’s economy and growth model. However, SOEs’ quasi-fiscal activities conducted outside the fiscal framework obscure the overall fiscal stance, complicating macroeconomic management. This paper finds that the balance sheet expansion by major SOEs averaged about 20 percent of the state budget expenditure over the past five years. If this activity were booked as budgetary expenditure, the non-oil deficit would have been about 3.5 percentage points higher in 2024–25, indicating a larger fiscal expansion than recorded in official budget figures. Moreover, underperformance of several SOEs could create significant contingent fiscal risks. Policymakers should better align SOE investment with fiscal objectives, strengthen monitoring, and assess risks to public finances.

We study how banking groups adjust corporate credit supply in response to tighter macroprudential policies. Using granular data on syndicated corporate loans, we show that banking groups reallocate lending from bank subsidiaries toward affiliated nonbank financial institutions (NBFIs) following regulatory tightening. Relative to bank subsidiaries within the same group, NBFI subsidiaries expand lending, and their credit supply also increases in absolute terms. We estimate that by ‘banking on’ their nonbanks, banking groups offset, on average, more than half of the contraction in bank lending induced by macroprudential tightening. Our findings highlight an important intra-group reallocation channel through which banking groups can partially offset regulatory constraints and result in greater bank–nonbank interconnectedness.

This paper analyzes the redistributive effects of inflation across 18 European economies from 2021:Q3 to 2022:Q2, using unique micro-datasets for this country sample. We estimate inflation’s impact on household welfare through the consumption basket, income, and wealth channels. Our main contribution is incorporating real assets into the wealth channel and accounting for behavioral responses to inflation in both the income and wealth channels. These factors significantly alter inflation’s distributional effects compared to previous literature. The inflation shock is estimated to have caused an average welfare loss equivalent to 18.5 percent of annual household income across our sample, with households in the poorest income quintiles suffering the largest losses. Cross-country differences also widen when real assets are incorporated, with a few economies even showing welfare gains for some or all quintiles because house prices rose faster than inflation.