World Bank Report Highlights Crucial 25-Year Window for Poorest Nations to Escape Poverty

The world’s 26 poorest countries face a pivotal 25 years to progress from low-income to middle-income status, according to a new World Bank analysis. These nations, home to over 40% of people surviving on less than $2.15 a day, are at the center of global efforts to eliminate extreme poverty. However, progress has stagnated due to ongoing conflicts, economic crises, and weak growth.

The findings, featured in the upcoming Global Economic Prospects report set to be released on January 14, 2025, show that while 39 nations, including India, Indonesia, and Bangladesh, transitioned to middle-income status over the past 25 years, the remaining countries have largely been left behind. Since 2010, South Sudan and the Syrian Arab Republic joined this struggling group, where average inflation-adjusted GDP per capita has increased by less than 0.1% annually over the past 15 years. Without substantial growth, only six of these nations are expected to achieve middle-income status by 2050.

Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, emphasized the importance of this 25-year period, noting that low-income countries face tougher conditions than their predecessors. He pointed out that over the past 15 years, per capita incomes in these nations have barely grown. However, he highlighted examples from East, Southeast, and South Asia that demonstrate how external support and domestic policy reforms can create conditions for sustained economic progress, even in countries marked by conflict and instability.

The analysis systematically examines the trajectory of today’s low-income nations since the start of the century and evaluates their prospects for reaching middle-income status. The report identifies numerous challenges, particularly for the 22 Sub-Saharan African countries in this category. Seventeen are affected by conflict or fragility, with violence levels far exceeding those in other developing nations. Most face significant risks from climate change, high levels of debt, and geographic disadvantages, such as being landlocked and bordered by other impoverished countries.

Despite these obstacles, the report highlights the untapped potential in these nations. They possess abundant natural resources, including 60% of the world’s cobalt reserves and 50% of graphite reserves, critical for renewable energy technologies. These countries also have exceptional solar energy potential and rapidly growing working-age populations, which are shrinking in most other regions.

Examples from Nepal and Rwanda illustrate pathways to progress. Nepal, once among the world’s poorest nations, overcame a civil war and implemented a Comprehensive Peace Accord in 2006. Supported by international assistance, its per capita income grew more than fourfold by 2019, elevating it to middle-income status. Similarly, Rwanda’s post-genocide recovery included ambitious reforms in economic stabilization, private enterprise promotion, and tourism development. With the help of international debt relief and investments in education and healthcare, Rwanda’s per capita income has nearly quadrupled since 2000, bringing it close to middle-income status.

Ayhan Kose, Deputy Chief Economist of the World Bank Group, underscored the urgency of addressing the challenges faced by these 26 nations. He stated that the global fight against extreme poverty hinges on their progress, which requires immediate action from both national policymakers and the international community. These countries, he noted, are grappling with a “triple harm” of conflict, climate change, and debt distress, demanding focused attention and support.

The report suggests that low-income nations can draw inspiration from other countries that successfully transitioned to middle-income status in earlier decades. Political stability and growth-oriented policies played crucial roles in sustaining long periods of robust economic expansion. Reforms that improved the business environment and directed resources into investment were key drivers of this progress, offering a roadmap for the world’s poorest countries to climb the economic ladder in the years ahead.

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