By Stanley Onyeka, Lagos
Global economy set for weakest run since 2008, says World Bank
By Stanley Onyeka, Lagos
Heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008 outside of outright global recessions, according to the World Bank’s latest Global Economic Prospects report.
The turmoil has resulted in growth forecasts being cut in nearly 70% of all economies—across all regions and income groups.
Accordingly, it said that global growth is projected to slow to 2.3% in 2025, nearly half a percentage point lower than the rate that had been expected at the start of the year, even as it retained Nigeria’s at 3.6%.
However, despite the slow-paced growth, the World Bank does not anticipate a global recession.
“Nevertheless, 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,” it added in the report released yesterday.
According to the global lender, “Growth is expected to slow in nearly 60% of all developing economies this year, averaging 3.8% in 2025 before edging up to an average of 3.9% percent over 2026 and 2027. That is more than a percentage point lower than the average of the 2010s. “Low-income countries are expected to grow 5.3% this year—a downgrade of 0.4 percentage point from the forecast at the start of 2025.
“Tariff increases and tight labor markets are also exerting upward pressure on global inflation, which, at a projected average of 2.9% in 2025, remains above pre-pandemic levels.
Commenting, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill, was quoted as saying: “Outside of Asia, the developing world is becoming a development-free zone. It has been advertising itself for more than a decade.
Regional outlook:
For Sub-Saharan Africa (SSA), growth is expected to edge up to 3.7% in 2025 and average 4.2% in 2026–27, assuming the external environment does not deteriorate further, inflation declines as expected, and regional conflicts subside.
For Nigeria, the region’s biggest economy, growth is retained at 3.6% this year, which is supported by a thriving services sector and recovering oil production, and forecast to rise to 3.7% in 2026 and further to 3.8% in 2027.
The SSA Outlook report continued: “Despite weakening growth among emerging market and developing economies (EMDEs) globally, SSA is one of two regions expected to see growth acceleration in the forecast period.
“Growth in SSA accelerated to an estimated 3.5% in 2024, up from 2.9% in 2023.
“This improvement was driven primarily by increased public investment and rising commodity exports.
“The strengthening in activity was widespread, with over 60 percent of the region’s economies experiencing faster growth in 2024 than in the previous year.
“However, the region’s two largest economies showed divergent trends last year.
However, for South Africa, the region’s second largest economy, growth slowed to 0.5% due to persistent structural challenges and inefficient fiscal spending.
Across other countries in the region, growth accelerated to 4.6% in 2024, compared to 3.7% the previous year.
Nevertheless, 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.
Regional risks
The SSA report noted further that risks to the outlook are tilted to the downside.
It said: “Global growth could underperform projections due to heightened uncertainty and potential adverse trade policy changes.
“Additional downside risks include a sharper-than-expected economic slowdown in China, escalating global geopolitical tensions, worsening political instability, and the continuation of violent conflicts in the region.
“An intensification of the conflict in Sudan could drive up food prices—at least in parts of SSA—due to reduced supply and higher transportation costs.
“More persistent inflation could keep regional and global interest rates elevated, intensifying challenges for highly indebted countries, while more frequent and severe extreme weather events—such as droughts or floods—could worsen poverty across many SSA countries.”
It also noted that some large economies that experienced high inflation, such as Angola, Ethiopia, and Nigeria, have paused further policy rate hikes due to progress in the disinflation process.
Around the globe
Elsewhere around the world, it’s a mixed fortune:
- Middle East and North Africa: Growth is expected to rise to 2.7% in 2025 and further strengthen to an average of 3.9% in 2026–27.
- East Asia and Pacific: Growth is expected to slow to 4.5% in 2025 and to 4.0% in 2026–27.
- Europe and Central Asia: Growth is expected to slow to 2.4% in 2025 before edging up to 2.6% in 2026–27.
- Latin America and the Caribbean: Growth is projected to remain steady at 2.3% in 2025 before firming to an average of 2.5% in 2026–27.
- South Asia: Growth is projected to moderate to 5.8% in 2025 and firm to an average of 6.2% in 2026–27.
