Global economic shocks are battering fragile and conflict-affected states (FCS), and many are struggling to recover.

A new IMF report reveals these vulnerable economies are hit harder and recover more slowly than others when shocks like commodity price changes or global demand fluctuations occur.

FCS economies are more sensitive to external disruptions than their peers. For example, GDP per capita in these nations reacts twice as strongly to commodity price shocks.

Weak institutions and a lack of fiscal control worsen matters, with governments often increasing spending during good times and failing to cut back when revenues drop.

The economic challenges are immense. Unemployment in FCS averages 8.5%, compared to 7.1% in non-FCS countries.

Poverty is also far more widespread, with 29% of people in FCS living below the poverty line—more than double the rate in non-FCS.

Conflict compounds these struggles. On average, FCS face 21 fatalities per million people annually due to violence, compared to just 3.6 in other nations.

Trade deficits are also massive, averaging -18.9% of GDP, compared to -12.7% in non-FCS.

Foreign aid is a lifeline for these economies. Grants make up 7% of GDP in FCS, compared to just 2.9% in non-FCS. However, most of this aid is designed for long-term development, not immediate relief during crises.

The IMF’s emergency lending programs have stepped in during critical moments like the pandemic. These funds provided much-needed stabilization when many fragile states faced economic collapse. However, the report warns that more counter-cyclical support is needed to address future shocks.

Fragility creates a vicious cycle. Poor governance, reliance on commodity exports, and underdeveloped financial systems amplify the impacts of global shocks. These weaknesses also feed into each other, making it harder for FCS to recover and stabilize.

Breaking this cycle requires bold action. The IMF calls for institutional reforms, economic diversification, and improved financial access.

International partners must also step up, providing financial aid that responds quickly to crises.

Without these changes, the future for fragile states looks bleak. Most FCSs won’t recover their pre-pandemic GDP levels until 2026, far behind the rest of the world.

Poverty and unemployment are expected to worsen, deepening the divide.