The World Bank has warned that the 2020s risk becoming a "lost decade" for many developing economies, as weak growth, rising debt, slowing investment and repeated global shocks leave countries struggling to narrow the income gap with richer nations.

In its June 2026 edition of the 'Global Economic Prospects' report, the World Bank painted a bleak picture of development progress since the COVID-19 pandemic, saying many poorer nations remain far behind where they were expected to be before the crisis. 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 out of every two developing economies has failed since 2019 to advance on the most rudimentary promise of development: narrowing the income gap with the world's most prosperous economies."

According to the World Bank, the setbacks have been severe. It said that by the end of 2026, "one-quarter of developing economies, one-third of low-income economies, and half of fragile and conflict-affected economies will be poorer than they were in 2019 on the eve of the COVID-19 crisis."

The report highlighted growing financial pressures across developing nations, noting that "government debt in developing economies has surged to all-time highs," while "private investment growth in the 2020s has more than halved relative to the 2010s."

The World Bank said the slowdown in income growth is particularly concerning because it threatens long-term convergence between poorer and richer economies.

The report projected that the level of per-capita income across emerging market and developing economies excluding China and India, relative to advanced economies, "is not expected to return to the pre-pandemic level until after 2028, implying nearly a decade of lost income convergence."

The report also warned that weaker growth prospects are reducing governments' ability to tackle poverty and development challenges. It said constrained fiscal space and declining development assistance are "stripping away critical buffers for the most vulnerable countries, widening existing development gaps and exacerbating food insecurity and poverty."

Despite the warning, the World Bank said opportunities remain to reverse the trend in the next decade. Gill pointed to artificial intelligence, clean energy investment and growing regional trade integration as forces that could support stronger growth if countries prepare adequately.

The report said, "On the upside, broader investment in and adoption of artificial intelligence (AI) could lift activity," while Gill argued that AI, energy transformation and deeper regional integration are "powerful enough to unlock transformative progress in the next decade."

However, the World Bank stressed that developing economies will need stronger infrastructure, better-skilled workers, improved business environments and greater private investment to take advantage of those opportunities.

"The first half of the 2020s are now behind us, and it is possible that this decade might already be lost. But the 2030s are not," Gill said.

The report called for urgent policy action to strengthen growth, improve fiscal sustainability and create jobs, warning that without reforms many developing economies could continue to fall behind their richer peers through the remainder of the decade.

Published on June 13, 2026