The World Bank has revised its global economic growth forecast for the year to 2.3%, marking a decline of nearly half a percentage point from earlier predictions made at the start of the year.

The report indicates that the global economy is not expected to enter a recession in 2025. This information was revealed in the latest report titled 'Global Economic Prospects', which highlights that about 70% of the world's economies, across various regions and income categories, have seen downgraded growth projections due to ongoing disruptions.

According to the World Bank, the average global growth rate from 2020 to 2026 is likely to be the slowest for any decade since the 1960s.

The ongoing rise in trade tensions and policy uncertainty has led to the expectation that global economic growth this year would be at its slowest pace since 2008, excluding periods of clear global recessions.

Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics, stated that, except for Asia, development has been almost absent in developing economies, a trend evident for over a decade.

He noted that the growth rate in these economies has gradually declined over the last three decades, from approximately 6% annually in the early 2000s, to 5% in the following decade, and then to below 4% in the most recent ten years.

Gill further highlighted that this decline is accompanied by a significant reduction in global trade growth rates, which fell from an average of 5% in the early 2000s to around 4.5% in the subsequent decade, finally dropping to less than 3% in the most recent one.

Investment growth has also noticeably slowed, with debt levels reaching unprecedented heights.

The World Bank anticipates that the growth rate will slow in nearly 60% of developing economies this year, averaging 3.8% by 2025, before experiencing a slight improvement to 3.9% in 2026 and 2027. This expected growth rate is over a percentage point lower than the average growth experienced in the 2010s.

Low-income countries are projected to achieve a growth rate of 5.3% in 2023, which represents a decrease of 0.4 percentage points from earlier forecasts for 2025.

Rising tariffs and tight labor markets are contributing to upward pressure on global inflation, which is expected to average 2.9% in 2025, remaining above pre-pandemic levels.

The slowdown in growth presents significant challenges for developing economies striving to accelerate job creation, reduce extreme poverty, and narrow income gaps compared to advanced economies.

Growth in per capita income in developing economies is expected to be 2.9% in 2025, reflecting a drop of 1.1 percentage points compared to the average growth between 2000 and 2019. The report also suggests that global growth could rebound more rapidly than anticipated if major economies manage to alleviate trade tensions, subsequently reducing overall policy uncertainty and financial volatility.

The analysis indicated that resolving current trade disputes by halving tariffs compared to their levels in late May could increase global growth by about 0.2 percentage points on average during 2025 and 2026.

Aihan Kose, Vice President of the World Bank and Director of the Prospects Group, remarked that emerging and developing economies have benefited from trade integration but are now caught in the crossfire of a global trade war.

He emphasized that a smart approach to this reality involves doubling efforts to expand trade integration with new partners, alongside strengthening growth-supportive reforms and enhancing financial resilience to weather this economic storm.

The report states that as trade barriers increase, developing economies should consider further liberalizing their markets by forming strategic partnerships with other economies in trade and investment, and diversifying their trade sources, particularly through regional agreements.

Regionally, the MENA region is expected to see growth rise to 2.7% in 2025, continuing to improve to an average of 3.9% in 2026-2027. In East Asia and the Pacific, growth is projected to drop to 4.5% in 2025 and 4% in 2026-2027. Similarly, growth in Europe and Central Asia is expected to decline to 2.4% in 2025, with a slight improvement to 2.6% in 2026-2027. Latin America and the Caribbean are anticipated to maintain a steady growth rate at 2.3% in 2025, eventually stabilizing at 2.5% in the average of 2026-2027. In South Asia, growth is expected to decline to 5.8% in 2025, with stabilization at 6.2% in 2026-2027. The Sub-Saharan Africa region is forecasted to gradually increase its growth rate to 3.7% in 2025, reaching an average of 4.2% in 2026-2027.