<\/p>\n
The World Bank expects the world economy to expand 2.7% in 2025 and again in 2026.<\/p>\n
The global economy is growing steadily in the face of war, protectionist trade policies and high interest rates. It just isn\u2019t growing fast enough to bring relief to the world\u2019s poorest, the World Bank said in its latest assessment of the global economy.<\/p>\n
The bank expects the world economy to expand 2.7% in 2025 and again in 2026. It\u2019s a remarkably consistent performance \u2013 matching 2023 and 2024 \u2013 but also a lacklustre one. Growth is running 0.4 percentage points below the 2010-2019 average. The slump reflects lingering damage from the \u201cadverse shocks of recent years,\u2019\u2019 including COVID-19 and Russia\u2019s invasion of Ukraine.<\/p>\n
The bank\u2019s latest Global Economics Prospects report, which comes out in January and June, did offer some good news. Global inflation, which was running over 8% two years ago, is expected to slow to an average of 2.7% in 2025 and 2026, close to many central bank targets.<\/p>\n
The World Bank, comprising 189 member nations, seeks to reduce poverty and boost living standards by providing grants and low-rate loans to poor economies.<\/p>\n
For low- and middle-income countries \u2013 so-called developing economies \u2013 growth is expected to come in at 4.1% this year and slow slightly to 4% in 2026. The World Bank says that plodding pace of growth is \u201cinsufficient\u2019\u2019 to ease global poverty.<\/p>\n
The World Bank noted that growth has been decelerating for years in the developing world \u2013 from a robust average of 5.9% a year in the 2000s to 5.1% in the 2010s to just 3.5% in the 2020s. Excluding China and India, those countries are lagging behind the world\u2019s wealthy countries in per-capita economic growth.<\/p>\n
Their economies have been hobbled by sluggish investment, high levels of debt, the increasing costs of climate change and growing protectionism that hurts their exports. None of those things seems likely to go away anytime soon. \u201cThe next 25 years will be a tougher slog for developing economies than the last 25,\u2019\u2019 World Bank chief economist Indermit Gill said in the report.<\/p>\n
The world\u2019s poorest countries \u2013 with per-person annual incomes below US$1,145 \u2013 grew just 3.6% in 2024 \u201con account of escalating conflict and violence\u2019\u2019 in places like Gaza and Sudan.<\/p>\n
\u201cWe have all-out war in Europe, in the Middle East and in Africa,\u2019\u2019 Gill told reporters ahead of the report\u2019s release. \u201cConflicts are the worst economy killers.\u2019\u2019 The bank expects low-income countries\u2019 growth to rebound to 5.7% this year and 5.9% in 2026, \u201ccontingent\u2019\u2019 on the easing of conflict in some places.<\/p>\n
The World Bank marked up the outlook for the United States, the world\u2019s largest economy. It now expects U.S. gross domestic product \u2013 the nation\u2019s output of goods and services \u2013 to expand 2.3% this year. That is down from 2.8% in 2024 but up from the 1.8% the bank forecast for this year back in June. The American economy has managed to thrive despite high interest rates. U.S. growth has been boosted by strong consumer spending, an influx of immigrants who eased labour shortages and improvements in productivity.<\/p>\n
Europe, by contrast, is expanding at an agonizingly slow pace. The World Bank downgraded its GDP growth forecast for the 20 countries that share the euro currency to 1% this year from the 1.4% it had projected in June. The bank cited \u201canemic\u2019\u2019 consumer spending, business investment and manufacturing activity, partly reflecting the cost of high energy prices.<\/p>\n
The Chinese economy, the world\u2019s second biggest, is expected to decelerate \u2013 from 4.9% growth last year to 4.5% in 2025 and 4% in 2026. China\u2019s real estate market has crashed, demoralizing consumers and causing them to rein in their spending. But Chinese exports and investment in factories and infrastructure have been sturdy.<\/p>\n
Meanwhile, India, which has supplanted China as the world\u2019s fastest-growing major economy, is expected to see a 6.7% expansion both this year and next. In rural areas, a recovery in farm production has boosted consumer spending \u2013 though inflation and slow lending growth have discouraged shoppers in cities.<\/p>\n
The World Bank\u2019s forecasts assume no major shifts in trade or budget policies.<\/p>\n
But in the United States, president-elect Donald Trump is promising big things \u2013 slashing taxes, slapping hefty tariffs on foreign goods, deporting millions of immigrants who are working in the country illegally. All those policies could drive up U.S. inflation and disrupt global trade. The bank said that the outlook for U.S. economic policy is \u201cunclear, with resulting impacts on U.S. and global growth and inflation clouded by uncertainty.\u2019\u2019<\/p>\n
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