The global economy is experiencing its slowest growth rate in 25 years, significantly impacting efforts to reduce poverty and economic disparities. Emerging economies, including India, Brazil, and Eastern European nations like Romania, are projected to finish the first quarter of the 21st century with the weakest growth outlook.
According to a recent Daily Market Report by the ASF, this trend will have substantial repercussions on the global economy, as 60% of economic growth over the past quarter-century has been driven by emerging countries. Consequently, initiatives aimed at poverty alleviation and bridging gaps both between and within countries will be severely affected.
Despite expectations for global economic stabilization in the next two years, emerging economies are anticipated to progress at a slower pace in reaching income levels comparable to developed nations. The global economy is predicted to grow by 2.7% in both 2025 and 2026, maintaining the same rate as in 2024, as inflation and interest rates gradually decline. Growth in emerging economies is expected to remain around 4% over the next two years.
However, this performance is weaker than pre-pandemic levels and insufficient to promote the necessary advancements for poverty reduction and broader development goals. The World Bank's analysis marks its first systematic evaluation of emerging economies' performance in the early 21st century.
During the first decade, emerging economies saw the fastest growth since the 1970s. Yet, progress has slowed since the global financial crisis of 2008-2009. Global economic integration has also decelerated, with foreign direct investment inflows to emerging economies now at about half of their early 2000s levels.
New global trade restrictions in 2024 were five times higher than the average from 2010-2019. As a result, global economic growth has decreased from 5.9% in the 2000s to 5.1% in the 2010s, and to 3.5% in the 2020s. Since 2014, except for China and India, average per capita income growth rates in emerging economies have lagged by half a percentage point behind those in wealthy economies, widening the gap between the rich and the poor.
Emerging economies now represent about 45% of global GDP, up from 25% in 2000, reflecting their increased importance in the global economy. Furthermore, over 40% of their goods exports are directed towards other emerging economies, double the figure from 2000.