Yet one in four developing economies remains poorer than it was in 2019
WASHINGTON, January 13, 2026
The resilience reflects better-than-expected growth—especially in the United States, which accounts for about two-thirds of the upward revision to the forecast in 2026. Even so, if these forecasts hold, the 2020s are on track to be the weakest decade for global growth since the 1960s. The sluggish pace is widening the gap in living standards across the world, the report finds:
In 2025, growth was supported by a surge in trade ahead of policy changes and swift readjustments in global supply chains. These boosts are expected to fade in 2026 as trade and domestic demand soften. However, the easing global financial conditions and fiscal expansion in several large economies should help cushion the slowdown, according to the report.
“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said
Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics
. “But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets. Over the coming years, the world economy is set to grow slower than it did in the troubled 1990s—while carrying record levels of public and private debt. To avert stagnation and joblessness, governments in emerging and advanced economies must aggressively liberalize private investment and trade, rein in public consumption, and invest in new technologies and education.”
Growth is projected to be higher in low-income countries, reaching an average of 5.6% over 2026–27, buoyed by firming domestic demand, recovering exports, and moderating inflation. However, this  will not be sufficient to narrow the income gap between developing and advanced economies.
These trends could intensify the job-creation challenge confronting developing economies, where 1.2 billion young people will reach working age over the next decade. Overcoming the jobs challenge will require a comprehensive policy effort centered on three pillars. The first is strengthening physical, digital, and human capital to raise productivity and employability. The second is improving the business environment by enhancing policy credibility and regulatory certainty so firms can expand. The third is mobilizing private capital at scale to support investment. Together, these measures can help shift job creation toward more productive and formal employment, supporting income growth and poverty alleviation.
In addition, A special-focus chapter of the report provides a comprehensive analysis of the use of fiscal rules by developing economies, which set clear limits on government borrowing and spending to help manage public finances. These rules are generally linked to stronger growth, higher private investment, more stable financial sectors, and a greater capacity to cope with external shocks.
“With public debt in emerging and developing economies at its highest level in more than half a century, restoring fiscal credibility has become an urgent priority,” said
M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group
. “Well-designed fiscal rules can help governments stabilize debt, rebuild policy buffers, and respond more effectively to shocks. But rules alone are not enough: credibility, enforcement, and political commitment ultimately determine whether fiscal rules deliver stability and growth.”
More than half of developing economies now have at least one fiscal rule in place. These can include limits on fiscal deficits, public debt, government expenditures, or revenue collection.   However,
Regional Outlooks:
East Asia and Pacific
: Growth is expected to slow to 4.4% in 2026 and to 4.3% in 2027. For more, see
regional overview
Europe and Central Asia
: Growth is forecast to hold steady at 2.4% in 2026 before strengthening to 2.7% in 2027. For more, see
regional overview
Latin America and the Caribbean
: Growth is projected to edge up to 2.3% in 2026 before firming to 2.6% in 2027. For more, see
regional overview
Middle East, North Africa, Afghanistan and Pakistan
: Growth is expected to rise to 3.6% in 2026 and further strengthen to 3.9% in 2027. For more,
see regional overview
South Asia
: Growth is projected to fall to 6.2% in 2026 before recovering to 6.5% in 2027. For more, see
regional overview
Sub-Saharan Africa
: Growth is expected to rise to 4.3% in 2026 and firm to 4.5% in 2027. For more, see
regional overview
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