WASHINGTON — The global economy is on track for its weakest performance outside of recessions since 2008, as trade tensions and policy uncertainty drag down growth prospects across the board, the World Bank said Tuesday.
In its latest Global Economic Prospects report, the bank projected worldwide growth will slow to 2.3% in 2025—nearly half a percentage point lower than forecast at the start of the year. Nearly 70% of all economies, across all income levels and regions, have seen their growth forecasts downgraded.
Though the World Bank does not expect a global recession, it warned that if current projections hold, the first seven years of the 2020s will mark the slowest stretch of global growth since the 1960s.
“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics. “Growth in developing economies has ratcheted down for three decades—from 6% annually in the 2000s to less than 4% in the 2020s.”
According to the report, growth is expected to slow in nearly 60% of developing economies this year. Those countries are forecast to grow 3.8% in 2025, slightly improving to 3.9% over the following two years—still well below the average 5% growth seen in the 2010s.
Low-income countries are expected to grow 5.3% in 2025, down 0.4 percentage point from earlier projections. Meanwhile, global inflation remains a concern, with price growth forecast to average 2.9% this year—still above pre-pandemic levels—driven by rising tariffs and tight labor markets.
The World Bank warned that the slowdown could hamper efforts in developing economies to create jobs, reduce poverty, and close the income gap with advanced economies. Per capita income growth in developing countries is projected at 2.9% for 2025, significantly below the 2000–2019 average.
If developing countries outside China manage to sustain 4% GDP growth through 2027, it would still take two decades to return to their pre-pandemic economic trajectories, the report found.
There is some hope. A resolution to ongoing trade conflicts could offer a modest boost, the bank said. If global tariffs were cut in half, growth could rise by 0.2 percentage point in both 2025 and 2026.
“Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict,” said M. Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group.
The report urges policymakers in developing economies to pursue new trade partnerships, improve fiscal resilience, and focus public spending on the most vulnerable. Long-term strategies should prioritize business-friendly reforms, workforce development, and enhanced labor market conditions.
Global cooperation, the bank said, remains essential to help fragile economies withstand future shocks, particularly through concessional financing, multilateral support, and emergency aid for countries in conflict.
