The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience.

To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.

All applicable charts (.xlsx) available for download upon request.

Detox Development: Repurposing Environmentally Harmful Subsidies examines the impact of subsidies on these foundational natural assets. Explicit and implicit subsidies—estimated to exceed US$7 trillion per year—not only promote inefficiencies but also cause much environmental harm.

The report fills significant knowledge gaps in the literature using new data and empirical methods. It aims to enhance our understanding of the scale of subsidies and their impacts, and offer solutions that are available to reform or repurpose them in efficient and equitable ways. By improving our understanding of the magnitude, consequences, and drivers of policy successes and failures, we can render future reforms more achievable.