The global economy is on course for its slowest growth since the 2008 financial crisis—excluding recession years—due to intensifying trade disputes and policy uncertainty, according to the World Bank’s latest Global Economic Prospects report released on Tuesday, June 11, 2025.
The report forecasts global GDP growth to slow to 2.3% in 2025, nearly 0.5 percentage points lower than earlier projections. This downturn has led to downward revisions in growth estimates for nearly 70% of economies across all regions and income levels.
While a full-scale recession is not anticipated, the World Bank noted that if current trends persist, average growth for the first seven years of the 2020s could become the slowest of any decade since the 1960s.
Developing Economies Face Growing Struggles
World Bank Chief Economist Indermit Gill highlighted the deepening crisis in emerging markets:
“Outside of Asia, the developing world is becoming a development-free zone.”
He emphasized that annual growth in developing countries has steadily declined over the past three decades—from 6% in the 2000s, to 5% in the 2010s, and now below 4% in the 2020s. This mirrors a similar fall in global trade growth, now under 3%, while global debt levels have hit record highs.
Growth is projected to slow in nearly 60% of developing economies in 2025, with an average rate of 3.8%, rising marginally to 3.9% in 2026 and 2027—well below the 2010s average. Meanwhile, low-income countries are expected to grow by 5.3%, down from earlier forecasts.
Inflation and Sluggish Investment Complicate Recovery
Trade protectionism and tight labour markets continue to fuel inflation, which is forecast to average 2.9% in 2025, still above pre-pandemic levels. This elevated inflation, combined with slower investment and declining productivity, will hinder efforts to reduce poverty and expand job opportunities in developing countries.
Per capita income in emerging economies is expected to grow by 2.9% in 2025, which is 1.1 percentage points below the pre-pandemic average.
The report warns that without stronger growth, developing nations—excluding China—will need nearly 20 years to regain the economic trajectory lost to the pandemic.
A Call for Global Cooperation
Deputy Chief Economist Ayhan Kose urged developing economies to adapt by forging new trade partnerships, promoting pro-growth reforms, and enhancing fiscal resilience.
“Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict,” he said.
The World Bank estimates that resolving current trade disputes and reducing tariffs could boost global growth by 0.2 percentage points over 2025 and 2026.
As the global economy faces structural headwinds, the World Bank stresses that greater international cooperation and open trade policies will be critical to reigniting sustainable and inclusive growth.
