The World Bank has lowered its forecast for global economic growth in 2025 to 2.3 per cent, nearly half a percentage point below its prediction at the start of the year. This slowdown reflects growing trade tensions, persistent policy uncertainties, and a challenging international environment, the Bank revealed in its latest Global Economic Prospects report released on Tuesday.
The projected 2.3 per cent growth would mark the weakest global economic expansion outside of a recession since 2008, the year of the global financial crisis. The slowdown affects nearly 70 per cent of the world’s economies, cutting across all regions and income groups.
Despite the gloomy outlook, the World Bank does not expect a global recession in the near future. However, if the current growth trends continue, the average global growth rate for the first seven years of the 2020s will be the slowest in more than six decades, since the 1960s.
Indermit Gill, the World Bank’s Chief Economist and Senior Vice-President for Development Economics, warned about the widening gap between richer and poorer nations. “Outside of Asia, the developing world is becoming a development-free zone,” he said, adding that this region has been lagging behind for over a decade.
The report highlights a steady decline in growth rates for developing economies. In the 2000s, these countries recorded an average growth of 6 per cent annually. This slowed to 5 per cent in the 2010s and has now dropped to under 4 per cent in the 2020s. The slowdown in trade and investment is closely linked to this decline. Global trade growth has fallen from 5 per cent in the 2000s to less than 3 per cent today, while investment growth has weakened and debt levels have reached record highs.
The World Bank predicts that nearly 60 per cent of developing economies will experience slower growth in 2025. The average growth for these countries is expected to be 3.8 per cent in 2025, improving only slightly to 3.9 per cent by 2027. This is more than one percentage point lower than the average growth in the 2010s.
Low-income countries are also facing downgrades in their growth prospects. The report estimates their growth at 5.3 per cent in 2025, a 0.4 percentage point drop from earlier forecasts. At the same time, global inflation is expected to remain elevated, with an average rate of 2.9 per cent in 2025, mainly due to tariff increases and tight labor markets. This rate remains above levels seen before the COVID-19 pandemic.
The slowdown threatens to stall progress on critical development goals. Job creation, poverty reduction, and efforts to close the income gap with richer countries will all face setbacks. The report warns that per capita income growth in developing countries is forecast to be just 2.9 per cent in 2025, which is 1.1 percentage points below the 2000–2019 average.
If developing countries outside China continue to grow at only 4 per cent annually through 2027, it could take them about 20 years to return to their pre-pandemic growth paths. This long recovery period would delay improvements in living standards for millions.
However, the World Bank also sees hope if global trade tensions ease. Resolving disputes and cutting tariffs by half could add 0.2 percentage points to global growth in 2025 and 2026. This modest boost could help reverse some of the current weaknesses in the global economy.
To adapt to rising protectionism, the Bank recommends that developing economies diversify their trade partnerships and pursue regional agreements. Strengthening strategic alliances can help reduce risks and build resilience in uncertain times.
The report also stresses the need for governments to improve domestic revenue collection, carefully target spending toward the most vulnerable populations, and manage public finances more effectively. Given limited public resources and growing demands, these steps are vital to support sustainable development.
Furthermore, sustainable growth will depend on creating a better business environment, expanding opportunities for productive employment, and aligning workforce skills with market needs. This approach can help countries tap into their full economic potential and create jobs for their young populations.
Finally, the World Bank calls for greater global cooperation to support the most vulnerable countries. Multilateral initiatives, concessional financing, and special aid for nations affected by conflict are essential to help these economies cope with the challenges ahead.
For Nigeria and other developing countries, the report’s message is clear: urgent action is needed to overcome economic headwinds and achieve steady, inclusive growth in the years to come.
