Developing economies, which drive 60% of global growth, face their weakest long-term growth outlook in over two decades, according to the World Bank’s latest Global Economic Prospects report.

The global economy is projected to expand by 2.7% annually in 2025 and 2026, while growth in developing economies is expected to remain steady at 4%. However, this pace is below pre-pandemic levels and insufficient to reduce poverty or achieve broader development goals.

The report reveals that while developing economies experienced robust growth in the early 21st century, averaging 5.9% in the 2000s, growth has steadily declined, dropping to 3.5% in the 2020s. Factors such as reduced foreign direct investment (FDI), increased trade restrictions, high debt burdens, and the rising costs of climate change have hindered progress.

Indermit Gill, the World Bank’s Chief Economist, highlighted the need for domestic reforms to stimulate private investment, strengthen trade ties, and improve the efficient use of resources. Despite these challenges, developing economies now account for 45% of global GDP, up from 25% in 2000, and their economic interdependence has grown significantly.

The report emphasizes the critical influence of major developing economies like China, India, and Brazil, noting that their growth directly impacts other developing economies, amplifying the need for collective and strategic reforms in the years ahead.