The growth of developing economies is in grave danger within a quarter of a century

The World Bank has confirmed that developing economies are expected to record, by the end of this year 2025, the weakest long-term growth expectations since the year 2000, which threatens to decline global growth and increase economic risks internationally, according to what the European Euronews network wanted.

The future of developing economies

In this case, developing economies include all those that are not classified as advanced economies.
Growth in these regions is expected to remain steady at about 4% over the next two years, according to the latest report from the World Bank.
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When compared to global growth, it is expected to reach 2.7% between 2025 and 2026, while the performance of developing countries appears to be exceeding expectations. However, their progress is still slow compared to their historical growth levels.

Growth of developing economies until 2010

The World Bank indicated that developing economies witnessed, from 2000 to 2010, the fastest growth rate since the 1970s, and then the financial collapse in 2008 and 2009 led to the cessation of this expansion, which hindered trade, investment, and economic integration between countries.

Foreign investment flows

FDI flows to developing economies as a share of GDP are now about half their level in the early 2000s, the World Bank said.
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The report added that new global trade restrictions in 2024 will reach five times the average from 2010 to 2019.

The impact of Trump’s return

Given the arrival of President-elect Donald Trump to the White House, international trade tensions are also likely to increase in the coming years.
The Republican leader has referred to “tariffs” as “the nicest word in the dictionary,” threatening to impose tariffs on goods coming from abroad from countries like China and Mexico.

More challenges on the way

According to analysts, the World Bank’s warning states that weak growth in developing countries will not be sufficient to address poverty meaningfully and achieve development goals.
The organization estimates that 622 million people will remain in extreme poverty by 2030. Hunger and malnutrition will affect about the same number.
Developing economies are also becoming more interdependent, meaning that the growth cessation has wide-ranging effects, with more than 40% of goods from these regions going to other developing economies, double the proportion in 2000.
Between 2019 and 2023, these countries also represented 40% of global remittances, up from 30% in the first decade of the century.

The most difficult 25 years to come

“The next 25 years will be more difficult for developing economies than the past 25 years,” said Indermeet Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank Group.
“Most of the forces that aided their rise have dissipated, and in their place have come frightening headwinds from high debt burdens, weak investment, declining productivity growth and the rising costs of climate change,” he added.
Furthermore, the World Bank highlighted the risk of persistent inflation, which could delay interest rate cuts and thus slow investment.