Policymakers from developing economies left this week’s meetings of the International Monetary Fund and the World Bank with growing frustration, warning that repeated external shocks are undermining hard won economic reforms and pushing millions closer to crisis.
The latest strain comes from the ongoing conflict involving Iran, which has driven sharp increases in oil and fertiliser prices, adding fresh pressure to economies already weakened by the pandemic, the Russia Ukraine war and shifting global trade policies. For many countries, the result has been rising inflation, strained public finances and slowing growth.
The IMF has already revised its 2026 growth forecast for emerging markets downward to 3.9%, from 4.2% earlier in the year, with further declines possible if the conflict persists. Officials warn that the latest shock risks reversing progress in countries that had only recently stabilised their economies after debt crises.
Among the most vulnerable are nations such as Zambia and Sri Lanka, both of which have undergone painful debt restructuring processes. New fiscal pressures now threaten to undo those gains, while other economies are seeing the financial buffers built in recent years steadily eroded.
Finance leaders described a sense of fatigue at being forced to respond to successive crises beyond their control. Wale Edun noted that despite reforms including subsidy removal and foreign exchange adjustments, Nigeria continues to face repeated external disruptions that dilute progress and investor confidence.
Across the meetings, calls grew louder for a shift in approach. While the IMF and World Bank outlined existing support mechanisms, including emergency financing and crisis response funds, many delegates argued that these tools are no longer sufficient for the scale and frequency of current shocks. IMF Managing Director Kristalina Georgieva indicated that at least a dozen countries are already seeking financial assistance, with potential demand ranging between 20 billion and 50 billion dollars.
The World Bank, led by Ajay Banga, signalled it could mobilise up to 100 billion dollars if required, but stopped short of introducing new frameworks akin to those deployed during the height of the pandemic. The absence of fresh instruments has drawn criticism from economists who argue that existing measures have failed to place vulnerable economies on a sustainable footing.
Beyond immediate financial support, a growing number of policymakers are now advocating for greater self reliance and regional coordination. This includes expanding intra African trade, strengthening domestic resource mobilisation and accelerating investment in renewable energy to reduce exposure to global commodity shocks.
There is also renewed focus on leveraging critical minerals and other natural resources to drive industrial growth and job creation. In Asia, countries such as Vietnam and Indonesia have already moved to increase investment in renewable energy as part of broader resilience strategies.
Despite these efforts, the outlook remains precarious. World Bank estimates suggest a prolonged conflict could push an additional 50 million people into acute food insecurity, while millions more face job losses. For many developing nations, the challenge is no longer just recovery, but survival in an increasingly volatile global economy.
