Populations across the globe are aging at an unprecedented pace, making many countries increasingly reliant on migration to realize their long-term growth potential, according to a new report from the World Bank.

The World Development Report 2023: Migrants, Refugees, and Societies, identifies this trend as a unique opportunity to make migration work better for economies and people. Wealthy countries as well as a growing number of middle-income countries—traditionally among the main sources of migrants—face diminishing populations, intensifying the global competition for workers and talent. Meanwhile, most low-income countries are expected to see rapid population growth, putting them under pressure to create more jobs for young people.

“Migration can be a powerful force for prosperity and development,” said World Bank Senior Managing Director Axel van Trotsenburg. “When it is managed properly, it provides benefits for all people — in origin and destination societies.”

In the coming decades, the share of working-age adults will drop sharply in many countries. Spain, with a population of 47 million, is projected to shrink by more than one third by 2100, with those above age 65 increasing from 20% to 39% of the population. Countries like Mexico, Thailand, Tunisia and Türkiye may soon need more foreign workers because their population is no longer growing.

Beyond this demographic shift, the forces driving migration are also changing, making cross-border movements more diverse and complex. Today, destination and origin countries span all income levels, with many countries such as Mexico, Nigeria, and the U.K. both sending and receiving migrants. The number of refugees nearly tripled over the last decade. Climate change threatens to fuel more migration. So far, most climate-driven movements were within countries, but about 40% of the world’s population—3.5 billion people—lives in places highly exposed to climate impacts.

Current approaches not only fail to maximize the potential development gains of migration, they also cause great suffering for people moving in distress. About 2.5% of the world’s population—184 million people, including 37 million refugees—now live outside their country of nationality. The largest share—43%—lives in developing countries.

The report underscores the urgency of managing migration better. The goal of policymakers should be to strengthen the match of migrants’ skills with the demand in destination societies, while protecting refugees and reducing the need for distressed movements. The report provides a framework for policymakers on how to do this.

“This World Development Report proposes a simple but powerful framework to aid the making of migration and refugee policy,” said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics. “It tells us when such policies can be made unilaterally by destination countries, when they are better made plurilaterally by destination, transit and origin countries, and when they must be considered a multilateral responsibility.”

Origin countries should make labor migration an explicit part of their development strategy. They should lower remittance costs, facilitate knowledge transfers from their diaspora, build skills that are in high demand globally so that citizens can get better jobs if they migrate, mitigate the adverse effects of “brain drain,” protect their nationals while abroad, and support them upon return.

Destination countries should encourage migration where the skills migrants bring are in high demand, facilitate their inclusion, and address social impacts that raise concerns among their citizens. They should let refugees move, get jobs, and access national services wherever they are available.

International cooperation is essential to make migration a strong force for development. Bilateral cooperation can strengthen the match of migrants’ skills with the needs of destination societies. Multilateral efforts are needed to share the costs of refugee-hosting and to address distressed migration. Voices that are underrepresented in the migration debate must be heard: this includes developing countries, the private sector and other stakeholders, and migrants and refugees themselves.

The World Bank today released its 2023 Logistics Performance Index report, a measure of countries’ ability to move goods across borders with speed and reliability.

The seventh edition of Connecting to Compete, the Logistics Performance Index (LPI) report comes after three years of unprecedented supply chain disruptions during the COVID-19 pandemic, when delivery times soared. The LPI, which covers 139 countries, measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, such as the quality of logistics services, trade- and transport-related infrastructure, and border controls.

“Logistics are the lifeblood of international trade, and trade in turn is a powerful force for economic growth and poverty reduction,” said Mona Haddad, Global Director for Trade, Investment, and Competitiveness at the World Bank. “The Logistics Performance Index helps developing countries identify where improvements can be made to boost competitiveness.”

On average across all potential trade routes, 44 days elapse from the time a container enters the port of the exporting country until it leaves the destination port, with a standard deviation of 10.5 days. That span represents 60 percent of the time it takes to trade goods internationally.

According to LPI 2023, end-to-end supply chain digitalization, especially in emerging economies, is allowing countries to shorten port delays by up to 70% compared to those in developed countries. Moreover, demand for green logistics is rising, with 75 percent of shippers looking for environmentally friendly options when exporting to high income countries.

“While most time is spent in shipping, the biggest delays occur at seaports, airports, and multimodal facilities. Policies targeting these facilities can help improve reliability,” said Christina Wiederer, Senior Economist with the World Bank Group’s Macroeconomics, Trade & Investment Global Practice and the report’s co-author.

Such policies include improving clearance processes and investing in infrastructure, adopting digital technologies, and incentivizing environmentally sustainable logistics by shifting to less carbon-intensive freight modes and more energy-efficient warehousing.

Economic activity in the Europe and Central Asia region is likely to remain subdued this year due to the ongoing fallout from Russia’s invasion of Ukraine, persistent high inflation and tighter financial conditions, says the World Bank’s Economic Update for the region, released today.

Regional output is now expected to grow by 1.4% in 2023, substantially better than the previously anticipated 0.1%. The positive, though deeply depressed, economic activity in 2023 reflects a softer contraction of Russia’s economy and an improvement in Ukraine’s outlook. Regional growth is expected to increase to an average 2.7% over 2024-25 as inflation eases, domestic demand recovers, and the external environment improves.

A sharp rise in consumer prices, particularly for food and energy, resulted in median annual inflation spiking to 15.9% by late 2022 in the emerging markets and developing economies (EMDEs) of Europe and Central Asia, the highest in more than 20 years, and the highest among all developing regions of the world. Inflation averaged less than 4% in Europe and Central Asia EMDEs before it began rising in 2021.

The outlook remains highly uncertain. Growth in 2023 may be weaker if the war caused by Russia’s invasion of Ukraine escalates further, food and energy prices continue to increase, interest rate hikes accelerate globally or in the region, or there is a sudden reversal of capital flows to the region. There could be spillovers to growth from the current banking developments in some advanced economies.

Ukraine’s economy is projected to grow by 0.5% this year, following a staggering contraction of 29.2% in 2022, the year of Russia’s invasion of the country. While the economic toll suffered by Ukraine as a result of the invasion is enormous, the reopening of Ukraine’s Black Sea ports and resumption of grain trade, as well as substantial donor support, are helping support economic activity this year. According to recent World Bank estimates, the cost of reconstruction and recovery in Ukraine has now grown to $411 billion, which is more than 2 times the size of Ukraine’s pre-war economy in 2021.

Türkiye experienced two devastating earthquakes on February 6, 2023, which have resulted in direct damages of about $34.2 billion, or 4% percent of the country’s 2021 GDP, according to World Bank estimates. Actual costs to meet the full range of recovery and reconstruction needs could be double the direct damages. Incorporating the impact of the recent earthquakes, growth is projected at 3.2% in 2023, rising to an average of 4.2% over 2024-25, underpinned by government support to households and investment amid ongoing reconstruction efforts.

Against the background of slow growth and high inflation, the report includes a special focus chapter on the cost-of-living crisis, which examines the impact of high inflation on the standards of living of people in the region.

“Inflation erodes the real incomes of people – and high inflation affects the poorest much more than the richest segments of the population,” said Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia region. “To better protect vulnerable groups and promote economic growth, policies should take into account the varying impacts of inflation across different income levels and use more precise indicators to measure the actual cost of high prices on the poorest.”

Governments across the region responded to the cost-of-living crisis with social assistance and subsidies, the latter involving moratoriums on energy price increases, reduced public transport fees, and caps on electricity and natural gas prices for households and businesses.

The report’s analysis, however, reveals the unequal burden of the cost-of-living crisis. It finds that inflation was 2 percentage points higher for the poorest 10% of the population compared to the wealthiest 10%. This difference exceeded 5 percentage points in some countries in the region, including Moldova, Montenegro, and North Macedonia.

Policies that do not account for the different inflation rates faced by households are likely to provide inadequate support to vulnerable groups and may end up being both inefficient and less effective, the report notes. It recommends going beyond the standard consumer price index (CPI) to measure inflation in order to capture more precisely the actual cost of living of the poorest. This is essential for designing better growth and poverty alleviation policies.

Latin America and the Caribbean economies have proven relatively resilient in the wake of increasing debt stress, inflation and rising global uncertainty. But new headwinds in the form of lower commodity prices, higher interest rates in developed countries and China’s unsteady recovery could potentially turn the region’s prospects bleak.

In order to boost much needed growth, countries should preserve their hard-won resilience and seize the unique opportunities global economy trends offer in nearshoring – moving production closer to home markets, and the green industry, according to a new World Bank report, “The Promise of Integration, Opportunities in a Changing Global Economy”.

The report estimates regional GDP will grow by 1.4 percent in 2023, a lower-than-expected rate. Rates of 2.4 percent are expected for 2024 and 2025, too low to make significant progress in poverty reduction.

“The region has largely recovered from the pandemic crisis but unfortunately is back to the low growth levels of the previous decade,” said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean. “Countries need to urgently accelerate inclusive growth, so that everyone benefits from development, and this will require maintaining macroeconomic stability and taking advantage of the opportunities trade integration offers today.”

After recovering from the pandemic, the region has managed with relative success the multiple crises caused by the Russian war in Ukraine and the uncertainties surrounding the global economy. Both poverty and employment are mostly back to pre-pandemic levels, while average inflation, excluding Argentina, is expected to decline to 5.0 percent in 2023 after reaching 7.9 percent in 2022.

According to the report, the region´s overall resilience is the result of hard-won progress in macroeconomic management over the past two decades. Preserving this progress will be paramount.

However, on average, fiscal imbalances remain high, expected at 2.7 percent of GDP in 2023, further eroding already tight fiscal space, and debt levels are estimated to reach 64.7 percent of GDP this year, slightly down from 66.3 percent in 2022. Furthermore, the recent bank failures in the US and Europe introduce additional uncertainty. Its resonance in LAC´s banking system and capital flows remains to be seen.

“The LAC region remains one of the least integrated, while trade openness and FDI flows have mostly been stagnant or decreasing over the past 20 years; countries should find ways to gain attractiveness and take advantage of the nearshoring trends,” said William Maloney, chief economist for Latin America and the Caribbean at the World Bank. “In addition, leveraging the region’s extraordinary comparative advantage in sustainable energy production, commodities necessary for emerging green industries, and the region’s unique natural capital offers a new potential source of growth, but will require policies to facilitate access to global markets, capital, and technology.”

The report suggests a series of integration advancing policies countries should consider to seize these opportunities. This includes long term policies such as reducing systemic risks, boosting traditional and digital infrastructure investments, and improving human capital, as well as short-term options such as preserving macro stability, promoting customs and transport regulatory advances, and improving export and investment promotion agencies.

Growth in developing East Asia and the Pacific is forecast to accelerate in 2023 as China’s economy reopens, while the pace of growth in most of the economies in the rest of the region is anticipated to ease after a strong rebound last year, a World Bank report said on Thursday.

Economic performance across the region, while robust, could be held back this year by slowing global growth, elevated commodity prices, and tightening financial conditions in response to persistent inflation, according to the World Bank’s East Asia and Pacific April 2023 Economic Update.

Growth in developing East Asia and the Pacific is forecast to accelerate to 5.1% in 2023 from 3.5% in 2022, as China’s reopening helps the economy rebound to a 5.1% pace from 3% last year. Growth in the region outside China is anticipated to moderate to 4.9% from the robust post-COVID-19 rebound of 5.8% in 2022, as inflation and elevated household debt in some countries weigh on consumption.

“Most major economies of East Asia and the Pacific have come through the difficulties of the pandemic but must now navigate a changed global landscape,” said World Bank East Asia and Pacific Vice President Manuela V. Ferro. “To regain momentum, there is work left to do to boost innovation, productivity, and to set the foundations for a greener recovery.”

 Among the larger economies of the region, most, including Indonesia, the Philippines, and Vietnam, are anticipated to grow more modestly in 2023 than in 2022. Most Pacific Island countries are forecast to grow faster in 2023, but Fiji’s exceptionally strong economic pace in 2022 is likely to moderate.

Most countries in the EAP region have seen two decades of higher and more stable growth than economies in other regions. The result has been a striking decline in poverty and, in the last decade, also a decline in inequality. However, the catch-up to the per capita income levels of advanced economies has stalled in recent years as productivity growth and the pace of structural reforms has slowed. Addressing the significant “reform gap,” especially in services, could magnify the impact of the digital revolution and boost productivity in sectors from retail and finance to education and health.

The economies of the region must also cope with three important challenges as policymakers act to sustain and accelerate economic growth in the aftermath of COVID-19. Rising tensions between major trading partners will affect trade, investment, and technology flows across the region. The rapid aging of the major economies of East and Southeast Asia heralds a new set of challenges and risks with implications for economic growth, fiscal balances, and health. Finally, the region is particularly exposed to climate risks, in part due to the high density of population and economic activity along its coasts.

“De-globalization, aging, and climate change are casting a shadow over the growth prospects of a region that has thrived through trade and is growing old fast,” said World Bank East Asia and Pacific Chief Economist Aaditya Mattoo. “However, promoting trade, addressing population dynamics, and enhancing climate resilience could strengthen growth.”

The global economy’s “speed limit”—the maximum long-term rate at which it can grow without sparking inflation—is set to slump to a three-decade low by 2030. An ambitious policy push is needed to boost productivity and the labor supply, ramp up investment and trade, and harness the potential of the services sector, a new World Bank report shows.

The report, Falling Long-Term Growth Prospects: Trends, Expectations, and Policies, offers the first comprehensive assessment of long-term potential output growth rates in the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine. These rates can be thought of as the global economy’s “speed limit.”

The report documents a worrisome trend: nearly all the economic forces that powered progress and prosperity over the last three decades are fading. As a result, between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century—to 2.2% a year. For developing economies, the decline will be equally steep: from 6% a year between 2000 and 2010 to 4% a year over the remainder of this decade. These declines would be much steeper in the event of a global financial crisis or a recession.

“A lost decade could be in the making for the global economy,” said Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics. “The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times—stubborn poverty, diverging incomes, and climate change. But this decline is reversible. The global economy’s speed limit can be raised—through policies that incentivize work, increase productivity, and accelerate investment.”

The analysis shows that potential GDP growth can be boosted by as much as 0.7 percentage points—to an annual average rate of 2.9%—if countries adopt sustainable, growth-oriented policies. That would convert an expected slowdown into an acceleration of global potential GDP growth.

“We owe it to future generations to formulate policies that can deliver robust, sustainable, and inclusive growth,” said Ayhan Kose, a lead author of the report and Director of the World Bank’s Prospects Group. “A bold and collective policy push must be made now to rejuvenate growth. At the national level, each developing economy will need to repeat its best 10-year record across a range of policies. At the international level, the policy response requires stronger global cooperation and a reenergized push to mobilize private capital.”

The report lays out an extensive menu of achievable policy options, breaking new ground in several areas. It introduces the world’s first comprehensive public database of multiple measures of potential GDP growth—covering 173 economies from 1981 through 2021. It is also the first to assess how a range of short-term economic disruptions—such as recessions and systemic banking crises—reduce potential growth over the medium term.

“Recessions tend to lower potential growth,” said Franziska Ohnsorge, a lead author of the report and Manager of the World Bank’s Prospects Group. “Systemic banking crises do greater immediate harm than recessions, but their impact tends to ease over time.”

The report highlights specific policy actions at the national level that can make an important difference in promoting long-term growth prospects:

Align monetary, fiscal, and financial frameworks: Robust macroeconomic and financial policy frameworks can moderate the ups and downs of business cycles. Policymakers should prioritize taming inflation, ensuring financial-sector stability, reducing debt, and restoring fiscal prudence. These policies can help countries attract investment by instilling investor confidence in national institutions and policymaking.

Ramp up investment: In areas such as transportation and energy, climate-smart agriculture and manufacturing, and land and water systems, sound investments aligned with key climate goals could enhance potential growth by up to 0.3 percentage point per year as well as strengthen resilience to natural disasters in the future.

Cut trade costs: Trade costs—mostly associated with shipping, logistics, and regulations—effectively double the cost of internationally traded goods today. Countries with the highest shipping and logistics costs could cut their trade costs in half by adopting the trade-facilitation and other practices of countries with the lowest shipping and logistics costs. Trade costs, moreover, can be reduced in climate-friendly ways—by removing the current bias toward carbon-intensive goods inherent in many countries’ tariff schedules and by eliminating restrictions on access to environmentally friendly goods and services.

Capitalize on services: The services sector could become the new engine of economic growth. Exports of digitally delivered professional services related to information and communications technology climbed to more than 50% of total services exports in 2021, up from 40%in 2019. The shift could generate important productivity gains if it results in better delivery of services. 

Increase labor force participation: About half of the expected slowdown in potential GDP growth through 2030 will be attributable to changing demographics—including a shrinking working-age population and declining labor force participation as societies age. Boosting overall labor force participation rates by the best ten-year increase on record could increase global potential growth rates by as much as 0.2 percentage point a year by 2030. In some regions—such as South Asia and the Middle East and North Africa—increasing female labor force participation rates to the average for all emerging market and developing economies could accelerate potential GDP growth by as much as 1.2 percentage points a year between 2022 and 2030.

The report also underscores the need to strengthen global cooperation. International economic integration has helped to drive global prosperity for more than two decades since 1990, but it has faltered. Restoring it is essential to catalyze trade, accelerate climate action, and mobilize the investments needed to achieve the Sustainable Development Goals.

The global pace of reforms toward equal treatment of women under the law has slumped to a 20-year low, constituting a potential impediment to economic growth at a critical time for the global economy, a new World Bank report shows.

In 2022, the global average score on the World Bank’s Women, Business and the Law index rose just half a point to 77.1—indicating women, on average, enjoy barely 77 percent of the legal rights that men do. At the current pace of reform, in many countries a woman entering the workforce today will retire before she will be able to gain the same rights as men, the report notes.

“At a time when global economic growth is slowing, all countries need to mobilize their full productive capacity to confront the confluence of crises besetting them,” said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics. “Governments can’t afford to sideline as much as half of their population. Denying equal rights to women across much of the world is not just unfair to women; it is a barrier to countries’ ability to promote green, resilient, and inclusive development.”

Women, Business and the Law 2023 assesses 190 countries’ laws and regulations in eight areas related to women’s economic participation—mobility, workplace, pay, marriage, parenthood, entrepreneurship, assets, and pensions. The data—which are current through Oct. 1, 2022—offer objective and measurable benchmarks for global progress toward legal gender equality. Today, just 14 countries—all high-income economies—have laws that give women the same rights as men.

Worldwide, nearly 2.4 billion women of working age still do not have the same rights as men. Closing the gender employment gap could raise long-term GDP per capita by nearly 20% on average across countries. Studies estimate global economic gains of $5-6 trillion if women started and scaled new businesses at the same rate as men do.

In 2022, only 34 gender-related legal reforms were recorded across 18 countries—the lowest number since 2001. Most reforms focused on increasing paid leave for parents and fathers, removing restrictions to women’s work, and mandating equal pay. It will take another 1,549 reforms to reach substantial legal gender equality everywhere in the areas measured by the report. At the current pace, the report, notes, it would take at least 50 years on average to reach that target.

The latest Women, Business and the Law report provides a comprehensive assessment of global progress toward gender equality in the law over the past 50 years. Since 1970, the global average Women, Business and the Law score has improved by about 2/3, rising from 45.8 to 77.1 points.

The first decade of this century saw strong gains towards legal gender equality. Between 2000 and 2009, over 600 reforms were introduced, with a peak of 73 annual reforms in 2002 and 2008. Since then, reform fatigue seems to have set in—particularly in areas that involve long-established norms, such as the rights of women to inherit and own property. New analysis of the data shows that economies with historically larger legal gender gaps have been catching up, especially since 2000.

Currently, equality of economic opportunity for women is highest in OECD high-income economies but important reforms have continued in developing economies. Sub-Saharan Africa made significant progress last year. The region accounted for over half of all reforms worldwide in 2022, with seven economies—Benin, the Republic of Congo, Côte d’Ivoire, Gabon, Malawi, Senegal, and Uganda—enacting 18 positive legal changes.

Although great achievements have been made over the last five decades, more needs to be done worldwide to ensure that good intentions are accompanied by tangible results —that is, equal opportunity under the law for women. Women cannot afford to wait any longer to reach gender equality. Neither can the global economy.

Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine, according to the World Bank’s latest Global Economic Prospects report.

 Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.

 The global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.

 Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8%—a full percentage point lower than the 2010-2019 average. In Sub-Saharan Africa—which accounts for about 60% of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2%, a rate that could cause poverty rates to rise, not fall.

 “The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass. “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”

 Growth in advanced economies is projected to slow from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession. In the United States, growth is forecast to fall to 0.5% in 2023—1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970. In 2023, euro-area growth is expected at zero percent—a downward revision of 1.9 percentage points. In China, growth is projected at 4.3% in 2023—0.9 percentage point below previous forecasts.

 Excluding China, growth in emerging market and developing economies is expected to decelerate from 3.8% in 2022 to 2.7% in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.

By the end of 2024, GDP levels in emerging and developing economies will be roughly 6% below levels expected before the pandemic. Although global inflation is expected to moderate, it will remain above pre-pandemic levels.

 The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging market and developing economies. Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5% on average—less than half the rate that prevailed in the previous two decades. The report lays out a menu of options for policy makers to accelerate investment growth.

 “Subdued investment is a serious concern because it is associated with weak productivity and trade and dampens overall economic prospects. Without strong and sustained investment growth, it is simply impossible to make meaningful progress in achieving broader development and climate-related goals,” said Ayhan Kose, Director of the World Bank’s Prospects Group. “National policies to boost investment growth need to be tailored to country circumstances but they always start with establishing sound fiscal and monetary policy frameworks and undertaking comprehensive reforms in the investment climate.”

 The report also sheds light on the dilemma of 37 small states—countries with a population of 1.5 million or less. These states suffered a sharper COVID-19 recession and a much weaker rebound than other economies, partly because of prolonged disruptions to tourism. In 2020, economic output in small states fell by more than 11%— seven times the decline in other emerging and developing economies. The report finds that small states often experience disaster-related losses that average roughly 5% of GDP per year. This creates severe obstacles to economic development.

 Policymakers in small states can improve long-term growth prospects by bolstering resilience to climate change, fostering effective economic diversification, and improving government efficiency. The report calls upon the global community to assist small states by maintaining the flow of official assistance to support climate-change adaptation and help restore debt sustainability.

The poorest countries eligible to borrow from the World Bank’s International Development Association (IDA) now spend over a tenth of their export revenues to service their long-term public and publicly guaranteed external debt—the highest proportion since 2000, shortly after the Heavily Indebted Poor Countries (HIPC) initiative was established, the World Bank’s new International Debt Report shows.

The report highlights rising debt-related risks for all developing economies—low- as well as middle-income economies. At the end of 2021, the external debt of these economies totaled $9 trillion, more than double the amount a decade ago. During the same period, the total external debt of IDA countries, meanwhile, nearly tripled to $1 trillion. Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60% of the poorest countries are already at high risk of debt distress or already in distress.

At the end of 2021, IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt totaled $46.2 billion—equivalent to 10.3% of their exports of goods and services and 1.8% of their gross national income (GNI), according to the report. Those percentages were up significantly from 2010, when they stood at 3.2% and 0.7% respectively. In 2022, IDA countries’ debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 percent to more than $62 billion, one of the highest annual increases of the past two decades. China is expected to account for 66% of the debt-service payments to be made by IDA countries on their official bilateral debt.

“The debt crisis facing developing countries has intensified,” said World Bank Group President David Malpass. “A comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring—so countries can focus on spending that supports growth and reduces poverty. Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty.”

On the surface, debt indicators seem to have improved in 2021, the report shows. As economic growth resumed following the global recession in 2020, public and publicly guaranteed external debt as a share of GNI returned to pre-pandemic proportions. However, this was not the case for IDA countries, where the debt- to-GNI ratio remained above the pre-pandemic level at 25%. Moreover, the economic outlook has deteriorated considerably.

In 2022, global growth is slowing sharply. Amid one of the most internationally synchronous episodes of monetary and fiscal policy tightening the world has seen in 50 years, the risk of a global recession next year has been rising. Currency depreciations have made matters worse for many developing countries whose debt is denominated in U.S. dollars. The 2021 debt-to-GNI improvement, as a result, is likely temporary.

Over the past decade, the composition of debt owed by IDA countries has changed significantly. The share of external debt owed to private creditors has increased sharply. At the end of 2021, low- and middle-income economies owed 61% of their public and publicly guaranteed debt to private creditors—an increase of 15 percentage points from 2010. IDA-eligible countries owed 21% of their external debt to private creditors by the end of last year, a 16-point increase from 2010. Also, the share of debt owed to government creditors that don’t belong to the Paris Club (such as China, India, Saudi Arabia, United Arab Emirates, and others) has soared. At the end of 2021, China was the largest bilateral lender to IDA countries, accounting for 49% of their bilateral debt stock—up from 18% in 2010. These developments have made it much harder for countries facing debt distress to quickly restructure their debt.

The rising debt vulnerabilities underscore the urgent need to improve debt transparency and provide more complete debt information to strengthen countries’ ability to manage debt risks and use resources efficiently for sustainable development.

“Poor debt transparency is the reason so many countries sleepwalk into a debt crisis,” said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group. “Complete, transparent debt data improves debt management. It makes debt sustainability analyses more reliable. And it makes debt restructurings easier to implement, so that countries can return quickly to economic stability and growth. It is not in any creditor’s long-term interest to keep public debt hidden from the public.”

The new International Debt Report reflects an advance in debt transparency. It draws from the World Bank’s International Debt Statistics database—the most comprehensive source of comparable cross-country information on the external debt of low- and middle-income countries. It improves on the earlier International Debt Statistics reports by adding substantive analysis and expanding both the breadth and specificity of the data in it.

Over the past five years, the International Debt Statistics database has identified and added $631 billion of previously unreported loan commitments, and an additional $44 billion were identified in 2021. The total of these newly documented additional loan commitments over the past five years is equivalent to more than 17% of the total outstanding public and publicly guaranteed debt stock in 2021.