Beyond their devastating human toll, conflicts impose deep and long\u2011lasting economic damage, particularly in sub\u2011Saharan Africa, Europe and the Middle East. IMF research shows that in countries where fighting occurs, economic output typically falls by about 3% at the onset of conflict and continues to decline, reaching cumulative losses of roughly 7% within five years. These losses often exceed the damage caused by financial crises or severe natural disasters and can persist for more than a decade.<\/p>\n
<\/p>\n
Wars also generate spillover effects. Neighbouring countries and key trading partners often experience slower growth, even when violence does not occur within their borders. Trade disruptions, heightened uncertainty and reduced investment contribute to these pressures.<\/p>\n
<\/p>\n
Major conflicts create harsh fiscal trade\u2011offs. Government spending shifts towards defence just as tax revenues collapse, worsening deficits and driving up debt. External balances also come under strain. While imports tend to fall due to weaker demand, exports often decline even more sharply, widening trade deficits. Capital flows retreat, forcing governments to rely more heavily on aid and remittances. Currency depreciation, falling reserves and rising inflation frequently follow, pushing central banks to raise interest rates.<\/p>\n
<\/p>\n
The IMF also highlights the macroeconomic risks linked to rising defence spending outside of active conflicts. Analysis of defence spending surges in 164 countries since 1945 shows that such increases typically last nearly three years and raise defence outlays by about 2.7 percentage points of gross domestic product (GDP).<\/p>\n
<\/p>\n
Higher defence spending can boost output in the short term by stimulating demand, but the longer\u2011term effects are more modest. Much of the increase in output comes directly from the spending itself, rather than stronger multiplier effects. Where defence procurement relies heavily on imports, external balances worsen and growth benefits are reduced.<\/p>\n
<\/p>\n
Financing choices matter. Defence booms are usually deficit\u2011financed initially, with fiscal deficits rising by around 2.6 percentage points of GDP and public debt increasing by about 7 percentage points within three years, and even more during wartime. This can crowd out private investment and weaken medium\u2011term fiscal sustainability.<\/p>\n
<\/p>\n
Post\u2011war recovery, the IMF warns, is often slow and uneven. Durable peace, early macroeconomic stabilisation, debt restructuring and coordinated international support are crucial. Recovery is strongest when governments combine security, institutional reforms and social investment to rebuild trust, restore productivity and create lasting economic opportunities.<\/p>\n
<\/p>\n
–IMF\/ChannelAfrica–<\/p>\n","protected":false},"featured_media":31160,"template":"","meta":{"_acf_changed":false},"news-type":[44],"class_list":["post-31159","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"War is once again reshaping the global economic landscape, with the number of active conflicts now at levels not seen since the end of the Second World War, according to new analysis in the April International Monetary Fund (IMF) World Economic Outlook.","published_date":"","news_description":"War is once again reshaping the global economic landscape, with the number of active conflicts now at levels not seen since the end of the Second World War, according to new analysis in the April International Monetary Fund (IMF) World Economic Outlook.","form_embed":"","author":"","image_caption":""},"_links":{"self":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/31159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/types\/news"}],"version-history":[{"count":1,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/31159\/revisions"}],"predecessor-version":[{"id":31161,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/31159\/revisions\/31161"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media\/31160"}],"wp:attachment":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media?parent=31159"}],"wp:term":[{"taxonomy":"news-type","embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news-type?post=31159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}