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Go out to dry? Long-term macroeconomic effects of drought in fragile and conflict-affected states

Go out to dry? Long-term macroeconomic effects of drought in fragile and conflict-affected states

Author/Editor:

Kalin I Tinchev; Laura Jaramillo



Publication date:

May 24, 2024

Electronic Access:

Free download. Use the free Adobe Acrobat Reader to view this PDF file



Disclaimer: IMF working papers describe the research being conducted by the authors and are published to provoke comment and encourage debate. The views expressed in IMF working papers are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.


Summary:

Using a comprehensive measure of drought and a panel autoregressive distributed lag model, the paper finds that worsening drought conditions can cause long-term scarring of real per capita GDP growth and affect long-term price stability. term in fragile and conflict-affected states (FCS). , more than in other countries, leaving them further behind. Lower crop productivity and lower investment are key channels through which drought impacts economic growth in SFCs. Under a high emissions scenario, drought conditions will reduce FCS real per capita GDP growth by 0.4 percentage points each year over the next 40 years and increase average inflation by 2 percentage points. The drought will also increase hunger in the SFCs, from already high levels. The confluence of lower food production and higher prices in a high emissions scenario would push 50 million more people in FCS into hunger. The macroeconomic effects of drought in FCS countries are amplified by their low copying capacity due to high public debt, low social spending, insufficient trade openness, high water insecurity and weak governance.

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