The World Bank has reported that developing economies are set to conclude the first quarter of the 21st century with the weakest long-term growth outlook since 2000, despite their contribution of 60% to global growth.

Challenges such as high global policy uncertainty, escalating trade tensions, and persistent inflation are expected to hinder investment and financing in these economies.

The global economy is projected to grow by 2.7% during this period, maintaining the pace seen in 2024 as inflation and interest rates gradually decline.

Since 2014, average per capita income growth in developing economies has lagged behind that of wealthy nations by half a percentage point, exacerbating income inequality.

Indermit Gill, the World Bank's chief economist, indicated that the next 25 years will pose significant challenges for developing economies due to high debt levels, weak investment, and the costs associated with climate change.

Nonetheless, there is potential for better-than-expected performance if both the United States and China experience stronger growth, which could positively impact developing economies.

Forecasts suggest that developing economies will grow at approximately 4% over the next two years, a rate that falls short of pre-pandemic levels and is inadequate for achieving poverty alleviation and broader development objectives.

Additionally, a new strategy focusing on domestic reforms, private investment, and efficient resource utilization is essential for fostering growth.

To improve growth prospects, the report emphasizes the need for developing economies to address infrastructure deficits, accelerate climate transitions, and enhance human capital.

In contrast, India is expected to maintain its position as the fastest-growing large economy, with projected growth rates of 6.7% for both 2025 and 2026, according to the January 2025 edition of the World Bank's Global Economic Prospects.