Global Economic Prospects, June 2025

Global growth is expected to slow to 2.3 percent in 2025—a 0.4 percentage point downgrade since January—and recover only modestly in 2026-27. If forecasts for the next two years materialize, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.  For emerging market and developing economies (EMDEs), growth is projected to decline to 3.8 percent this year before inching up to an average of 3.9 percent in the next two years.

Global Outlook. Global growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment. Growth is expected to weaken to 2.3 percent in 2025, the slowest pace since 2008 aside from outright global recessions. In 2026-27, a tepid recovery is expected, leaving global output materially below January projections. Progress by emerging market and developing economies (EMDEs) in closing per capita income gaps with advanced economies and reducing extreme poverty is anticipated to remain insufficient. The outlook largely hinges on the evolution of trade policy. Growth could be markedly lower if trade tensions escalate or policy uncertainty persists, which could also result in a build-up of financial stress. Yet, uncertainty and trade restrictions could diminish materially if major economies reach agreements durably addressing trade tensions. This underscores the importance of global cooperation to restore predictable, transparent, and rules-based mechanisms for resolving trade disputes. In addition, concerted policy efforts are needed—both internationally and domestically—to confront the deteriorating circumstances of many vulnerable economies and to boost long-term growth and job creation prospects across EMDEs.

Regional Outlooks. EMDE regions face a challenging outlook. In 2025, growth is projected to slow in East Asia and Pacific (EAP) as well as in Europe and Central Asia (ECA)—regions that are highly reliant on global trade—and, to a lesser extent, in South Asia (SAR). In Latin America and the Caribbean (LAC), growth is projected to be the lowest among EMDE regions, held back by long-standing structural challenges. In regions with many commodity exporters, including in the Middle East and North Africa (MNA) and Sub-Saharan Africa (SSA), growth is anticipated to face drags from subdued commodity demand. Against a deteriorating global backdrop, growth forecasts for 2025 have been downgraded in all EMDE regions relative to January projections. The looming jobs challenge faced by EMDEs—the need to generate sufficient employment for rapidly expanding working-age populations—could intensify already weak trends in per capita income catch-up and extreme poverty reduction. Risks are tilted to the downside and stem especially from additional increases in trade restrictions and policy uncertainty, with attendant potential for further weakening of external demand and heightened financial volatility.