New Delhi

The World Bank has cautioned that the 2020s could turn into a "lost decade" for many developing economies as sluggish growth, mounting debt burdens, weak investment and recurring global shocks hinder their ability to close the income gap with wealthier nations.

In its June 2026 edition of the Global Economic Prospects report, the World Bank painted a sobering picture of the post-pandemic world, noting that many developing countries remain well behind the economic trajectory they were expected to follow before the COVID-19 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 observed 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."

The Bank highlighted the depth of the setback, stating 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."

It also pointed to increasing financial strain across the developing world, 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 slowdown in income growth, the report warned, threatens the long-term process of convergence between poorer and richer economies.

According to its projections, 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 further cautioned that weaker growth prospects are reducing governments' ability to combat poverty and address development needs.

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 emphasised that opportunities still exist to alter the current trajectory.

Gill identified artificial intelligence, investments in clean energy and deeper regional trade integration as potential drivers of stronger growth if countries are prepared to harness them effectively.

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

However, the Bank stressed that developing economies would require stronger infrastructure, a more skilled workforce, improved business environments and increased private investment to take advantage of these 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.

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The report called for urgent policy action to boost growth, strengthen fiscal sustainability and generate employment, warning that without significant reforms, many developing economies could continue to lag behind their advanced counterparts for the remainder of the decade.