Chart of the Week: Conflict’s Legacy for Growth

IMF Blog, May 8, 2017

Source details

Author: The Editors
Date: May 8, 2017
Theme: Conflict has been on the rise since the early 2000s given the wars in Afghanistan, Iraq, and Syria. Conflict leads to immeasurable human costs and substantial economic losses with consequences that can persist for years.
Context: The IMF’s most recent World Economic Outlook (Box 1.1) analyzes conflict’s impact on economic growth and migration.

Conflict measured by severity thresholds of conflict-related deaths per million people: 50, 100, or 150.
Periods examined: 2002 to 2005, 2006 to 2009, and 2010 to 2015.
The share of global GDP affected by conflict is based on the first year in each period, before the negative effects of conflict on GDP have fully materialized.
WEO comparison: difference shown between pre-conflict GDP forecasts and actual GDP during conflict to estimate the size of effects.

Countries currently involved in conflict accounted for 1 to 2.5 percent of GDP in 2010.
Examples of cumulative GDP contractions during conflict:
- Libya: GDP contracted by a cumulative 80 percent during its latest conflict, before starting to recover.
- Central African Republic, Ukraine, and Yemen: cumulative GDP contractions as large as 15-40 percent during conflicts.

Conflict reduces investment in affected countries.
Health of the population is damaged.
Large outflows of refugees and economic migrants occur.
Disruption to education (people cannot attend school).
These effects contribute to prolonged economic damage that can last for many years.

Source: The Editors, May 8, 2017, IMF blog.