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WASHINGTON (AP) – The global economy is growing steadily in the face of war, protectionist trade policies and high interest rates. It’s simply not growing fast enough to help the world’s poorest, the World Bank said Thursday in its latest assessment of the global economy.
The bank expects the global economy to expand by 2.7% in 2025 and again in 2026. That’s a remarkably consistent performance, just like in 2023 and 2024, but also lackluster. Growth is 0.4 percentage points below the 2010-2019 average. The decline reflects lingering damage from “adverse shocks of recent years,” including COVID-19 and Russia’s invasion of Ukraine.
The bank’s latest Global Economics Prospects report, which comes out in January and June, offered good news. Global inflation, which was above 8% two years ago, is expected to slow to an average of 2.7% in 2025 and 2026, close to the targets of many central banks.
The World Bank, made up of 189 member countries, seeks to reduce poverty and raise living standards by offering grants and low-interest loans to poor economies.
For low- and middle-income countries (so-called developing economies), growth is expected to reach 4.1% this year and slow slightly to 4% in 2026. The World Bank says the slow rate of growth is “insufficient” to alleviate global poverty.
The World Bank noted that growth has been slowing for years in the developing world: from a robust average of 5.9% per year in the 2000s to 5.1% in the 2010s to just a 3.5% in the 2020s. Excluding China and India, these countries lag behind the world’s rich countries in per capita economic growth.
Their economies have been hampered by sluggish investment, high levels of debt, the rising costs of climate change and growing protectionism that hurts their exports. None of these things seem likely to go away anytime soon. “The next 25 years will be a tougher challenge for developing economies than the last 25,” World Bank chief economist Indermit Gill said in the report.
The world’s poorest countries, with annual per capita incomes of less than $1,145, will grow by just 3.6 percent in 2024 “due to escalating conflict and violence” in places like Gaza and Sudan.
“We have total war in Europe, the Middle East and Africa,” Gill told reporters ahead of the report’s release. “Conflicts are the worst killers of the economy.” The bank expects growth in low-income countries to recover to 5.7 percent this year and 5.9 percent in 2026, “depending” on the reduction of conflict in some places.
The World Bank charted the outlook for the United States, the world’s largest economy. He now expects US gross domestic product (the country’s production of goods and services) to rise 2.3% this year. That’s down from 2.8% in 2024, but more than the 1.8% the bank forecast for this year in June. The American economy has managed to prosper despite high interest rates. US growth has been driven by strong consumer spending, an influx of immigrants that eased labor shortages and productivity improvements.
