The Bahamas is highly vulnerable to the effects of climate change, including gradual sea level rise, biodiversity loss, and intensifying hurricanes. Together, these challenges threaten to undermine the country’s potential output over the long term by inflicting damages to physical assets and eroding natural capital, which is vital to its tourism-driven economy. Importantly, these risks are unevenly distributed with smaller islands being more exposed and sensitive than the larger, more developed ones. Addressing these disparities as well as closing economy-wide adaptation needs through investments in structural resilience can unlock large potential output gains. 

Media: IMF blog, EW News, Tribune242, The Nassau Guardian, TyN

Peru is the most vulnerable country to climate change among the LA5 group and is highly exposed to periodic El Niño events, which impair production in the country’s fishing, agriculture, and construction sectors, as well as inflict sizeable damages to physical assets. Given Peru’s low adaptive capacity, climate change will likely increase damages from natural disasters and undermine potential growth in the future. Investments in climate structural resilience and adaptation can unlock substantial potential output gains and fiscal savings for Peru. Complementing these investments with reforms and capacity building to increase public investment efficiency can deliver even greater fiscal benefits. 

Adaptation reduces climate change damages but is costly and cannot eliminate all risks. Governments have to decide on an acceptable balance of residual risks and to determine adaptation investment needs by weighing costs, benefits, and distributional effects. A literature review suggests that well-designed and well-implemented adaptation can have large returns. Global public adaptation needs in 2030 are estimated in the literature at around 1⁄4 percent of world GDP per year, but with very large disparities across countries and high uncertainty. Our analysis points to annual adaptation costs exceeding 1 percent of GDP for some developing countries, and above 10 percent of GDP for some island states. Many of these countries—despite typically not having contributed to global warming—face high adaptation needs while being challenged by limited fiscal space, limited capacity, or both, calling for additional support from the international community. To help guide national fiscal policies, countries could integrate climate risks and the cost of adaptation into their macro-fiscal frameworks. Shock scenarios are useful to reflect short-term impacts of climate disasters, while the long-term analysis of risks and uncertainties surrounding climate change requires scenarios that cover impacts from changes in both average and extreme events, as well as adaptation policies.

As part of its “Vision 2030”, the Kingdom of Saudi Arabia unveiled in October 2021 its National Investment Strategy (NIS), which was designed to diversify the Saudi economy and raise potential GDP  growth. Simulations conducted with IMF’s DIGNAR-19 model assessed the potential impacts of NIS 

and find that the overall goals—when supported by fiscal reforms, labor supply reform, and higher public sector efficiency— boost potential non-oil growth by 4.8 percentage points to about 8.8 percent in the medium term. 

Many emerging market and developing economies face a difficult trade-off between economic support and fiscal sustainability. Market-oriented structural reforms ease this trade-off by promoting economic growth and strengthening public finances. The empirical analysis in this note, based on 62 EMDEs over 1973-2014, shows that reforms are associated with sizeable and long-lasting reductions in the debt-to-GDP ratio mainly through higher fiscal revenues and lower borrowing costs. These effects are larger in countries with greater tax efficiency, lower informality, and higher initial debt. Moreover, a model-based analysis elaborates on how such fiscal gains can be enhanced when revenue windfalls associated with reforms are saved or channeled through higher public investment.

Media: IMF blog

A better understanding of how and why young entrepreneurs in South Asia and South-East Asia use digital financial services and digital business solutions can fuel inclusive growth and youth entrepreneurship in those regions. This report offers an up-to-date regional picture of trends related to youth entrepreneurship and financial inclusion based on results from Findex and Global Entrepreneurship Monitor (GEM) survey data, as well as qualitative insights from an online survey of 64 young entrepreneurs. Our analysis determined that youth enterprises in South Asia and South-East Asia use digital platforms mainly for marketing, sales and business operations; we also found interesting examples of companies that use digital solutions to promote inclusive growth, education, and health. There has been a rapid expansion in youth using digital payments, including mobile money, although this growth has mostly occurred among more educated and richer youth. With rapid technological growth there is an increased opportunity to better link digital finance and business platforms for young entrepreneurs, especially for developing countries. There is also a need for a wider range of digital financial service offerings, including savings, remittances and credit, and for these services to be better tailored to the needs of existing youth enterprises. The study recommends some alternative fintech solutions that can help fulfil this need.

Media: Youth Co:Lab blog

This is the first comprehensive review of micro-merchants in Bangladesh engaged in the retail sector. Some 2,100 participated in the survey, which has a particular focus on micro-merchants operating in fast moving consumer goods (FMCG) sector in rural areas. It addresses gaps in data and contributes to broader understanding of the market size, the nature of micro-merchant operations and opportunities for employment and entrepreneurship. By providing clear and transparent data on the micro-merchant segment engaged in the retail sector in Bangladesh, this study hopes to encourage policy makers, business partners and development partners to take greater interest the bottlenecks that limit their growth and to take action on their behalf.

This is the first comprehensive review of micro-merchants in Bangladesh engaged in the retail sector. Some 2,100 participated in the survey, which has a particular focus on micro-merchants operating in fast moving consumer goods (FMCG) sector in rural areas. It addresses gaps in data and contributes to broader understanding of the market size, the nature of micro-merchant operations and opportunities for employment and entrepreneurship. By providing clear and transparent data on the micro-merchant segment engaged in the retail sector in Bangladesh, this study hopes to encourage policy makers, business partners and development partners to take greater interest the bottlenecks that limit their growth and to take action on their behalf.