Policy Papers

The global economy is undergoing a profound transformation, and uncertainty runs high. The outlook points to dim growth prospects, both in the short and the medium term, though with notable variations across countries and regions. Low-income developing countries (LIDCs) face specific challenges, including high debt vulnerabilities, a dearth of external financing flows, cuts to official aid, and more restrictive immigration policies. The world’s poorest economies are particularly at risk of seeing their growth momentum decelerate and their per capita income gap relative to advanced economies widen. At the current conjuncture of sweeping policy shifts, heightened uncertainty, and weak medium-term growth prospects, it is crucial to implement credible and sustainable policy actions, build resilience against shocks, safeguard macroeconomic and financial stability, and undertake structural reforms to unlock private sector-led growth. Specifically for LIDCs, strengthening capacity to mobilize domestic resources and implement growth-enhancing reforms is crucial, while, in parallel, donors should explore ways to mobilize more development assistance.