World Bank Warns 1 in 4 Developing Economies Still Poorer Than 2019

The global economy is showing greater resilience than expected despite ongoing trade tensions and policy uncertainty, but one in four developing economies remains poorer than in 2019, according to the World Bank’s latest Global Economic Prospects report.

Global growth is projected to remain broadly stable over the next two years, easing to 2.6 percent in 2026 before rising to 2.7 percent in 2027. This represents an upward revision from the World Bank’s June forecast.

The resilience reflects stronger-than-expected growth, particularly in the United States, which accounts for nearly two-thirds of the upward revision for 2026. However, the report cautions that if current forecasts hold, the 2020s will be the weakest decade for global growth since the 1960s.

By the end of 2025, nearly all advanced economies had per capita incomes above 2019 levels, while around 25 percent of developing economies remained below pre-pandemic levels, widening global disparities in living standards.

Growth in 2025 was supported by a surge in trade ahead of policy changes and rapid adjustments in global supply chains. These factors are expected to fade in 2026 as trade and domestic demand soften. Easing financial conditions and fiscal expansion in several large economies are expected to help cushion the slowdown.

Global inflation is projected to decline to 2.6 percent in 2026, supported by softer labour markets and lower energy prices. Growth is expected to strengthen in 2027 as trade flows stabilise and policy uncertainty recedes.

World Bank Chief Economist Indermit Gill warned that while the global economy appears more resilient to uncertainty, its ability to generate growth is weakening. He stressed that without reforms, slow growth combined with record levels of public and private debt could strain public finances and credit markets.

Growth in developing economies is expected to slow to 4 percent in 2026 from 4.2 percent in 2025, before edging up to 4.1 percent in 2027. Low-income countries are projected to grow at an average of 5.6 percent over 2026 and 2027, although this will not be sufficient to close the income gap with advanced economies.

The report highlights the growing jobs challenge facing developing economies, where 1.2 billion young people will enter the workforce over the next decade. Addressing this challenge will require investment in physical, digital, and human capital, improvements to the business environment, and large-scale mobilisation of private investment.

It also underscores the importance of restoring fiscal sustainability, noting that public debt in developing economies is at its highest level in more than 50 years. While fiscal rules can help stabilise debt and strengthen credibility, the report emphasises that effective enforcement and political commitment are essential for long-term stability and growth.