The World Bank has warned that the 2020s risk becoming a “lost decade” for many developing economies, as weak growth, rising debt levels, slowing investment and repeated global shocks continue to hinder progress in narrowing the income gap with richer nations.
In its June 2026 edition of the Global Economic Prospects report, the global lender painted a grim picture of development trends since the COVID-19 pandemic, stating that many poorer countries remain significantly behind pre-pandemic expectations.
World Bank Chief Economist Indermit Gill said, “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.”
The report noted that nearly one in every two developing economies has failed since 2019 to make progress in narrowing the income gap with advanced economies. It further warned that by the end of 2026, one-quarter of developing economies, one-third of low-income economies, and half of fragile and conflict-affected states will be poorer than they were in 2019, before the COVID-19 crisis.
It highlighted growing fiscal stress across developing nations, stating that government debt has surged to record highs while private investment growth in the 2020s has more than halved compared to the previous decade.
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The World Bank said these trends are slowing income convergence between developing and advanced economies, with per capita income in emerging markets—excluding China and India—not expected to return to pre-pandemic levels until after 2028.
The report also cautioned that weaker growth is limiting governments’ ability to address poverty, with constrained fiscal space and declining development assistance reducing critical buffers for vulnerable countries and worsening food insecurity.
Despite the concerns, the report said there are opportunities for recovery if countries implement structural reforms. It pointed to artificial intelligence, clean energy investment and deeper regional trade integration as potential growth drivers.
World Bank officials said broader adoption of AI could significantly lift productivity and economic activity in developing economies if supported by adequate infrastructure and skilled workforces.
However, the institution stressed that without stronger infrastructure, improved business environments, and increased private investment, many countries risk continued stagnation.
Gill added that while the first half of the decade may already appear lost, the 2030s still hold potential if corrective policy actions are taken now to restore growth momentum and development progress.
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