The World Bank has issued a stark warning that the 2020s risk becoming a "lost decade" for numerous developing economies. Weak growth, escalating debt, declining investment, and repeated global shocks have left many nations struggling to bridge the income gap with wealthier countries.
Bleak Outlook in Global Economic Prospects Report
In its June 2026 edition of the 'Global Economic Prospects' report, the World Bank presented a grim assessment of development progress since the COVID-19 pandemic. Many poorer nations remain far behind the trajectory anticipated before the crisis.
World Bank Chief Economist Indermit Gill stated, "The 2020s will prove to be what their ominous opening foreshadowed: a lost decade—not just for a couple of outliers, but for dozens of developing economies."
Income Convergence Stalls
The report highlighted that nearly one out of every two developing economies has failed since 2019 to advance on the most fundamental promise of development: narrowing the income gap with the world's most prosperous economies. By the end of 2026, one-quarter of developing economies, one-third of low-income economies, and half of fragile and conflict-affected economies are projected to be poorer than they were in 2019, on the eve of the COVID-19 crisis.
Rising Debt and Slowing Investment
The World Bank noted growing financial pressures across developing nations. Government debt in these economies has surged to all-time highs, while private investment growth in the 2020s has more than halved compared to the 2010s. The slowdown in income growth is particularly concerning as it threatens long-term convergence between poorer and richer economies.
Per-capita income across emerging market and developing economies, excluding China and India, relative to advanced economies, is not expected to return to pre-pandemic levels until after 2028, implying nearly a decade of lost income convergence.
Impact on Poverty and Development
Weaker growth prospects are reducing governments' ability to tackle poverty and development challenges. Constrained fiscal space and declining development assistance are stripping away critical buffers for the most vulnerable countries, widening existing development gaps and exacerbating food insecurity and poverty.
Opportunities for Reversal
Despite the warning, the World Bank sees opportunities to reverse the trend in the next decade. Gill pointed to artificial intelligence, clean energy investment, and growing regional trade integration as forces that could support stronger growth if countries prepare adequately.
The report stated that broader investment in and adoption of artificial intelligence could lift activity. Gill argued that AI, energy transformation, and deeper regional integration are powerful enough to unlock transformative progress in the next decade.
Necessary Reforms
However, the World Bank stressed that developing economies will need stronger infrastructure, better-skilled workers, improved business environments, and greater private investment to take advantage of these opportunities.
"The first half of the 2020s are now behind us, and it is possible that this decade might already be lost. But the 2030s are not," Gill said.
The report called for urgent policy action to strengthen growth, improve fiscal sustainability, and create jobs. Without reforms, many developing economies could continue to fall behind their richer peers through the remainder of the decade.
