The economic consequences of conflict

Presentation on latest IMF report

The economic consequences of conflict – presentation on latest IMF report

On 6 May, Mahvash S. Qureshi, Deputy Chief of the Regional Studies Division of the African Department of the International Monetary Fund (IMF), will give a presentation at UNU-WIDER on ‘The economic consequences of conflict’ from the latest IMF Sub-Saharan Africa Regional Economic Outlook report.

This study explores the challenges faced by conflict-affected countries in sub-Saharan Africa, providing a comprehensive analysis of the trends and economic consequences of conflicts. Although the intensity of conflicts in recent years is lower than that observed in the 1990s, the region remains prone to conflicts with around 30% of the countries affected in 2017. Moreover, the nature of conflicts has changed, with traditional civil wars being replaced by non-state-based conflicts, including the targeting of civilians through terrorist attacks. Conflicts in the region are associated with a large and persistent decline in per capita GDP and have significant spillover effects on nearby regions and countries.

Conflicts also pose significant strains on public finances, lowering national revenues, raising military spending, and shifting resources away from development and social spending, which further aggravates the economic and social costs of the conflicts. The findings highlight the significant costs and formidable challenges faced by countries suffering from conflict and underscores the need to prevent conflicts, including by promoting inclusive economic development, building institutional capacity, and social cohesion.

For countries in conflict, efforts should focus on limiting the loss of human and physical capital by protecting social and development spending. While this may be especially daunting given fiscal pressures, well-targeted and co-ordinated humanitarian aid and concessional financial assistance can provide some relief.