- The World Bank has called on governments to accelerate investments in renewable energy to reduce exposure to oil market volatility.
- The institution has warned against cutting public investment during economic crises.
The World Bank has called on governments worldwide to accelerate investments in renewable energy, clean technologies and resilient infrastructure as rising oil supply pressures threaten economic stability and long-term development.
The institution said ongoing volatility in global oil markets has highlighted the urgent need for countries, particularly developing economies, to diversify their energy sources and reduce dependence on fossil fuels.
According to the World Bank, investments in renewable energy, solar infrastructure, decentralised energy systems and clean technologies have become increasingly important for protecting economies from future energy shocks while supporting growth, job creation and climate resilience.
The Bank stated that countries can strengthen their resilience by expanding their energy mix to include renewable energy and nuclear power. It noted that energy diversification reduces exposure to sudden price fluctuations and supply disruptions in global fuel markets.
To support this transition, the World Bank urged governments to continue investing in critical energy infrastructure, including solar mini-grids, decentralised electricity systems and reliable power networks. It stressed that such investments remain particularly important for remote, underserved and climate-vulnerable communities.
Beyond energy infrastructure, the institution emphasised the importance of sustained investment in human capital.
The World Bank said countries must modernise education systems and workforce development programmes to equip workers with skills needed in emerging industries such as clean technology, digital services and artificial intelligence.
The Bank highlighted the growing role of artificial intelligence in improving productivity across sectors. It noted that farmers are already using AI-powered tools to identify crop and livestock diseases, improve decision-making and gain better access to essential services.
Furthermore, the institution stressed that human capital development extends beyond technical training. It said governments must continue investing in quality education, healthcare and social protection programmes that strengthen workforce productivity and economic resilience.
Furthermore, the World Bank warned that the global economy is entering a period of heightened uncertainty driven by geopolitical tensions, climate-related risks, policy instability and rapid technological change.
The institution noted that higher oil prices and tightening global supplies are placing increasing pressure on public finances, especially in developing countries already grappling with inflation, widening fiscal deficits and supply chain disruptions.
Despite these challenges, the World Bank cautioned governments against cutting public investment to manage fiscal pressures.
According to the Bank, reducing long-term capital expenditure during economic downturns weakens economic recovery, lowers productivity, suppresses wage growth and reduces countries’ ability to withstand future shocks.
Instead, the institution advised governments to prioritise high-impact investments that create jobs, stimulate productivity and strengthen climate and energy security. The World Bank also recommended discontinuing poorly designed projects that deliver limited economic value while protecting strategic investments that generate long-term benefits.
In addition, the institution called for improvements in public sector efficiency to create fiscal space without relying excessively on taxation or borrowing. The Bank revealed that governments worldwide lose nearly one-third of public investment spending to inefficiencies, with losses often higher in low-income economies.
To address this challenge, it urged governments to strengthen project appraisal processes, improve procurement transparency, enhance implementation capacity and prioritise routine infrastructure maintenance. The institution warned that neglecting maintenance increases long-term costs by accelerating infrastructure deterioration and forcing governments to spend more on replacements.
The World Bank also highlighted the role of digital technologies in improving project monitoring, accountability and spending efficiency. It pointed to examples from countries such as Viet Nam and Cambodia, where governments increasingly use digital tools to track project performance and ensure public investments deliver measurable outcomes.
The institution added that stronger planning and project selection processes have become essential for maximising the impact of limited public resources.
As part of these efforts, the World Bank is supporting governments in the Philippines, Viet Nam and Mongolia to improve investment planning and project appraisal systems. The Bank said these reforms aim to ensure that selected projects generate sustainable economic growth, create jobs and strengthen long-term resilience.
The World Bank concluded that although global economic shocks are likely to persist, countries that prioritise clean energy investments, efficient public spending and human capital development will be better positioned to achieve sustainable growth, energy security and economic stability.