The World Bank has recently released its latest Global Economic Prospects report, revealing a significant downgrade in global growth forecasts. The organization has projected that global growth will fall to just 2.3% by 2025, marking the slowest pace since 2008, apart from any outright global recessions. This decline has been largely attributed to ongoing trade tensions, policy uncertainties, and a myriad of factors affecting economies worldwide.
To put this decline into perspective, the World Bank has revised its earlier expectations, cutting the forecast for global growth this year by 0.4 percentage points. In comparison, the growth expectation for the world economy has dropped from 2.8% in 2024 to the alarming figure of 2.3% in 2025. This forecast is nearly half a percentage point lower than what was anticipated at the beginning of the year.
Interestingly, the World Bank has maintained its growth projection for Nigeria at 3.6% for 2025, even as the outlook for the global economy dims considerably. Projections for Nigeria suggest a steady growth trajectory, with further increases expected to 3.7% in 2026 and 3.8% in 2027. Sub-Saharan Africa is also expected to see some improvement, with growth projected to reach 3.7% in 2025 and an average of 4.2% till 2026. Despite the global trends, these figures indicate a certain resilience, especially in the context of increasing trade uncertainties and adverse policy changes.
The chief economist at the World Bank, Indermit Gill, remarked that outside of Asia, developing nations are increasingly becoming what he termed a “development-free zone.” This is concerning, as growth in developing economies has plummeted over the past few decades—from an annual rate of around 6% in the 2000s to less than 4% in the 2020s. Coupled with a significant drop in global trade growth, which has dwindled from an average of 5% in the 2000s to below 3% in the current decade, the prospects for these economies appear particularly challenging.
The report has implications for almost 60% of developing nations, which are expected to experience slow growth averaging 3.8% by 2025. This figure is well below the average growth rates observed in the preceding decade. Additionally, low-income countries are projected to grow at 5.3% this year, a downward revision of 0.4 percentage points from earlier forecasts. Factors such as tariff increases and tight labor markets continue to put pressure on global inflation, which is projected to increase to an average of 2.9% in 2025—still above pre-pandemic levels.
The anticipated slowdown raises significant concerns regarding the ability of these nations to create jobs, alleviate extreme poverty, and close the income gap with developed countries. In fact, per capita income growth in developing economies is expected to stagnate at 2.9% in 2025, falling short by 1.1 percentage points compared to the average growth observed from 2000 to 2019. This outcome can have dire consequences for the social and economic fabric of these nations, affecting everything from education quality to healthcare accessibility.
In light of increasing trade barriers, the report encourages developing economies to pursue broader trade liberalization. Establishing strategic trade and investment partnerships with other nations and diversifying trade initiatives will be crucial in navigating the challenging economic landscape. Policymakers are advised to enhance their focus on mobilizing domestic revenues, with an emphasis on fiscal spending geared towards the most vulnerable segments of society. Strengthening fiscal frameworks could provide a much-needed buffer against global economic shocks.
The report further calls for improvements in the business environment and strong measures to promote job creation through effective skills training and market matchmaking. These conditions are essential for improving economic productivity and creating a sustainable workforce. It highlights the importance of global collaboration in supporting the most vulnerable economies, pointing to the need for multilateral interventions and concessional financing to help stabilize these nations.
In conclusion, while Nigeria holds a relatively stable growth projection amidst troubling global forecasts, the situation for many developing economies remains precarious. As the World Bank report indicates, strategic planning, investment in human capital, and international cooperation are essential for weathering the storms of economic uncertainty. The collective efforts of policymakers, businesses, and international organizations will determine whether these nations can sustain their growth and work towards closing persistent socioeconomic gaps in an increasingly fragmented global landscape.
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