Global economy faces bleakest decade since the 1960s says world bank

The global economy is projected to experience its most underwhelming decade since the 1960s, as reported by the World Bank. Recent analysis shows significant downgrades to growth expectations for nearly three-quarters of major economies, stemming largely from geopolitical trade policies and post-pandemic challenges.

The World Bank forecasts an average growth rate of just 2.5 per cent for the 2020s, a far cry from previous decades. Persistent trade disputes, sluggish recovery from the Covid-19 pandemic, and recent global energy crises have all played significant roles in this downward trajectory. This level of growth would mark the worst performance outside of a global recession since the 2008 financial crisis.

According to the report, the US economy is poised to grow by only 1.4 per cent in 2025, following a 2.8 per cent rise in 2024. The projection reflects a nearly 1 percentage point downgrade compared with earlier estimates. Growth downgrades have hit countries such as Thailand, South Africa, and the US particularly hard, sustaining a growing trend of economic slowdowns within developing regions.

The situation appears similarly dire across the eurozone, where the 20-country bloc is predicted to see growth fall to 0.7 per cent in the coming year. Even China, long considered a linchpin for global economic expansion, is expected to miss its annual GDP target of 5 per cent, instead reaching only 4.5 per cent. By 2027, Chinese growth could slide further to 3.9 per cent.

Emerging economies are suffering a particularly harsh downturn, with the World Bank noting that growth has steadily declined over the past three decades. While these countries achieved an annual growth rate of 6 per cent in the 2000s, the current rate has fallen below 4 per cent for the 2020s. The Bank’s Chief Economist, Indermit Gill, described these regions as entering a “development-free zone.”

The organisation highlighted the need for greater global economic cooperation to reverse these trends. It argued that addressing trade disputes and reducing trade barriers could lead to improvements in global GDP, potentially strengthening growth by 0.2 percentage points by halving current tariff levels. The report also explored plans to lift a ban on funding nuclear energy projects, marking a policy shift influenced by ongoing discussions with the White House.

The World Bank’s latest findings underline the importance of collaborative measures as the global economy faces its most challenging decade in over half a century. These headwinds reinforce the urgency for nations to take decisive action and foster a path towards long-term economic stability.