Updated January 25, 2026, by InfoJet
Reported by: Dr. Peter Asika
World Bank Says Developing Economies Face Slower Growth in 2026
World Bank Says Developing Economies Face Slower Growth in 2026
The World Bank has warned that developing economies are likely to experience slower economic growth in 2026, according to its latest Global Economic Prospects report released by the institution. The assessment was presented by the World Bank’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill, who highlighted mounting pressures on emerging and low-income countries.
Speaking through the report, Gill said global economic conditions remain challenging, with high interest rates, weak investment, and subdued trade continuing to weigh on growth prospects in developing regions. He noted that despite some easing of inflation, the broader global environment has not improved enough to support strong and sustained expansion.
According to the World Bank’s projections, growth in developing economies is expected to slow to around 4 percent in 2026, remaining below levels recorded before the COVID-19 pandemic. The Bank said this estimate is based on analysis of national accounts data, trade performance, capital flows, inflation trends, and public debt indicators across its member countries.
Gill explained that one of the main drivers of the slowdown is the prolonged period of tight global financial conditions. He said higher borrowing costs have increased debt servicing pressures for governments, leaving less fiscal space for spending on infrastructure, healthcare, education, and economic development.
The report also pointed to weak global trade as a key factor. According to the World Bank, slower growth in advanced economies has reduced demand for exports from developing countries, limiting foreign exchange earnings and slowing industrial and manufacturing activity.
In addition, the World Bank noted a decline in foreign direct investment flows into developing economies. Gill said investor caution, driven by geopolitical uncertainty and tighter financing conditions, has reduced capital inflows needed for job creation and productivity growth.
The institution further warned that economic recovery remains uneven. While some middle-income economies have shown relative resilience, many low-income countries are still struggling to recover from the shocks of the pandemic. In several cases, income per capita remains below pre-2020 levels, increasing the risk of prolonged poverty.
The World Bank said slower growth could have serious implications for employment and social stability. Weak expansion limits job creation, particularly for young populations, and puts additional pressure on government budgets at a time when social spending needs remain high.
Although inflation has moderated in parts of the developing world, Gill noted that price pressures remain elevated in some countries. Currency volatility and rising import costs continue to affect household purchasing power and business confidence.
To address these challenges, the World Bank called on governments to accelerate structural reforms aimed at boosting productivity and attracting private investment. These include improving regulatory frameworks, strengthening institutions, and expanding access to finance for small and medium-sized enterprises.
Gill also emphasized the importance of prudent debt management and international cooperation. He said concessional financing, debt restructuring where necessary, and coordinated global support would be critical in helping vulnerable economies navigate the current environment.
The World Bank concluded that without sustained policy action and investment, slower growth in 2026 could widen the gap between advanced and developing economies and slow progress toward long-term development goals.
InfoJet Insight
The World Bank’s warning, delivered by its Chief Economist, signals a difficult period ahead for developing economies. Slower growth in 2026 may translate into fewer jobs, tighter government budgets, and slower poverty reduction unless reforms and investment accelerate. The outlook reinforces the need for policy stability and global support to prevent temporary economic pressure from becoming a long-term setback.
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