By: Issah Olegor
The Global economy is heading for its weakest sustained performance in nearly two decades, according to the World Bank’s latest Global Economic Prospects report.
The warning comes as new projections show that global growth will slow to 2.3% in 2025—marking the lowest pace outside of formal recessions since the global financial crisis of 2008.
The Bank’s data paints a concerning picture: nearly 70% of economies worldwide—spanning all income levels and regions—have seen their growth forecasts revised downward this year due to rising trade tensions, mounting debt, policy uncertainty, and sluggish investment.
A Sluggish Start to the 2020s
While the global economy has shown signs of recovery from the COVID-19 pandemic and related shocks, the pace of growth has stalled.
If current projections hold, the first seven years of the 2020s will mark the slowest period of global economic expansion since the 1960s.
“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, World Bank Group Chief Economist and Senior Vice President for Development Economics.
He noted that growth in developing economies has been declining steadily—averaging 6% in the 2000s, 5% in the 2010s, and now dipping below 4% in the 2020s.
This slowdown parallels a fall in global trade growth—from 5% in the 2000s to under 3% today.
Compounding the challenge, investment growth has declined while public debt levels have surged to historic highs.
Developing Economies Under Pressure
Growth across developing nations is forecast to slow further in 2025, averaging 3.8% before inching up to 3.9% between 2026 and 2027.
This remains more than a full percentage point below the average of the previous decade.
The outlook is even more fragile for low-income countries, whose growth forecast for 2025 has been cut to 5.3%—a 0.4 percentage point drop from earlier projections.
Per capita income in developing countries is expected to grow at 2.9% next year, down from a 4% average between 2000 and 2019.
The implications are stark: it could take nearly two decades for many of these countries (excluding China) to return to their pre-pandemic growth trajectory.
Slowing growth threatens to derail progress in job creation, poverty reduction, and closing the income gap between low-income and advanced economies.
Tariff hikes, labour shortages, and persistent inflation—expected to average 2.9% in 2025—are all putting additional strain on economic recovery.
A Glimmer of Hope: Reversing Trade Tensions
Despite the grim outlook, the World Bank says that renewed global cooperation and reforms could help reverse the trend.
A reduction in trade barriers, for example, could lift growth modestly.
The Bank’s analysis suggests that halving current tariffs could boost global growth by 0.2 percentage points on average in both 2025 and 2026.
