World Bank Group – Global Economic Prospects, Jun 2025

The global economy is currently facing significant challenges due to increased trade tensions, heightened policy uncertainty, and other adverse shocks.

This has led to a deterioration in prospects for most economies, especially for emerging markets and developing economies (EMDEs). Downside risks include escalating trade barriers, persistent policy uncertainty, geopolitical tensions, and extreme climate events. However, there is hope for easing tensions if major economies are able to reach lasting agreements. In order to address these challenges, global cooperation is crucial to restore stability in the trade environment and support vulnerable countries dealing with conflict, debt burdens, and climate change. Domestic policy action is also essential for EMDEs to contain inflation risks, strengthen fiscal resilience, and prioritize spending to unlock job creation and long-term growth. Structural reforms focusing on institutional quality, private investment, and human capital are needed to address the daunting development challenges faced by countries in fragile and conflict situations. The outlook for global growth in 2025 is expected to weaken to 2.3 percent, with a tepid recovery in 2026-27. EMDEs will continue to struggle in closing income gaps with advanced economies and reducing extreme poverty, highlighting the importance of addressing trade tensions and policy uncertainties to secure a more predictable and transparent global environment for growth.