World Bank Predicts Slow but Steady Global Growth in 2025-2026

The World Bank projects global economic growth to remain stable but subdued, reaching 2.7% in both 2025 and 2026—matching last year’s level. In its latest report, the bank highlighted that while inflation and interest rates are expected to decline gradually, the pace of growth remains a concern, especially for developing economies.

Challenges for Developing Economies

Growth in developing economies is expected to hold steady at around 4%, significantly weaker than pre-pandemic levels. The World Bank warned that this rate is insufficient to reduce poverty or meet broader development goals.

“Most of the forces that once aided their rise have dissipated,” said Indermit Gill, the World Bank’s chief economist, citing high debt burdens, weak investment, sluggish productivity, and the escalating costs of climate change as significant headwinds.

Key Findings

• Per Capita Growth: Since 2014, developing countries (excluding China and India) have seen economic growth per capita fall behind wealthy economies by an average of 0.5 percentage points annually.
• Regional Growth:
  • East Asia and Pacific: Slower growth due to weak domestic demand in China.
  • Europe and Central Asia: Impacted by subdued demand in Europe.
  • Sub-Saharan Africa, Latin America, Middle East, and North Africa: Expected to benefit from stronger global demand, leading to more robust growth.

Call for Action

To counter these challenges, the World Bank emphasized the need for a “new playbook” in developing countries, focusing on:

1. Encouraging private sector investment.
2. Deepening trade relations.
3. Improving efficiency in capital, talent, and energy use.

Outlook and Implications

While global growth is steady, it remains insufficient to drive significant improvements in poverty alleviation and development. For developing economies, adapting to these challenges will require structural reforms and enhanced global cooperation.