The Long Descent: World Bank’s 2025 Forecast and the Global Economy’s Structural Malaise

In June 2025, the World Bank lowered its global economic growth forecast in 2025 to a miserable 2.3 percent, which would be the slowest ten-year period of global growth since the 1960s. This is not a mere trough, or a COVID-19 crisis hangover. Instead, it is the result of structural vulnerabilities, in both economic and political dimensions, which are shaking the sources of worldwide prosperity. The forecast by the World Bank was not to be treated as a normal recalibration. It is a red flag, a signal of a protracted stagnation that could last longer than the existing business cycle and redefine the global economic order of the decades to come.

The premise of this article is that the gloomy prediction by the World Bank is not a mere expression of figures. It is a indictment of a faulty economic consensus. Globalisation in its high-growth form is dead. The future will be stormy: that of economic fragmentation, policy incoherence and systemic inequality. The question we now have to face is whether we are ready to live in a world where growth is the exception rather than the rule?

Secular stagnation, a notion that was thrown out as an ivory tower construction, is now dominating the international macroeconomic debate. Initially devised to explain the behaviour of advanced economies stuck in a low-growth, low-inflation trap even with interest rates at zero, the phenomenon has spread around the world. The 2.3 percent growth projected by the World Bank is not only weak. It is representative of a bigger trend: the slowing productivity, weak investment and diminishing returns to capital in both developed and emerging economies.

The period after 2008 has already demonstrated the brittle nature of global financial capitalism. The pandemic COVID-19 destroyed the illusions about supply chain resilience. However, geopolitical fragmentation, as a by-product of U.S. decoupling with China, sanctions regimes and the weaponisation of economic policy, has now started to methodically tear down the very architecture that delivered three decades of hyper-globalisation. The consequence is the withdrawal into national self-interest. De-risking, reshoring and protectionism are no longer fringe, they are policy.

The most important factor to note is that the slowdown in the economy is not uniform. The formerly buzzing BRICS economies, which were considered the power of the “Rise of the Rest”, are experiencing varying destinies. A property crisis and demographic downturn in China, fiscal tightness in Brazil and structural inefficiencies in South Africa have dimmed their potential as drivers of global growth. Even India, which is being described as a bright spot, is being held back by its informal economy, low female labour force participation and increasing political risk. The so-called miracle of emerging markets is at best fracturing, and at worst, rewinding.

The macroeconomic policy reaction to this stagnation has been hugely inconsistent. battling inflation through high interest rates Central banks in the advanced economies, especially the U.S. Federal Reserve and the European Central Bank, are still struggling to tackle inflation, even as the demand environment is weakening. That monetary orthodoxy, with its still outstanding ghost of the 1970s, is now crashing headlong against a fiscal reality that is ever more constrained by debt ceilings, populist politics and geopolitical re-armament.

What we are seeing, effectually, is the breaking down of the post-2008 policy consensus. After having briefly regained legitimacy during the pandemic, fiscal expansion is now being targeted by austerity hawks. Meanwhile, the monetary policy is no longer powerful. As the total debt of the world economy has topped $315 trillion, and interest payments are competing with development expenditures, in particular in the Global South, the fiscal room to maneuver countercyclical stimulus is disappearing.

In addition, the multilateral institutions which have already been undermined by the nationalist feeling and geopolitical competitions are showing to be unprepared in organizing a unified international response. An IMF structural adjustment toolkit is beginning to seem even more outdated in a globe of convergent crises: climate shocks, compelled migration, artificial intelligence-based job dislocation, and debt distress. In the interim, the World Bank itself has a credibility problem. What can it mean by development in a world system which apparently is structurally incapable of providing it?

The present growth issue cannot be established without geopolitics. We are seeing the re-emergence of economic nationalism as auscultating principle. Whether it is the U.S. Inflation Reduction Act and the European Digital Sovereignty Agenda or China recalibrating its Belt and Road, the global economic story is no longer one of cooperation. It is concerned with control.

This transition has a significant effect on emerging economies. Their growth models have historically been based on export-led strategy which has been supported by the availability of global capital, open markets and stable multilateral regimes. Yet as the global demand fragments and capital moves steadily toward politically strategic as opposed to economically efficient locations, these paradigms are failing. It is not clear what will replace them, but it will probably be less inclusive, efficient and politically volatile.

Then there is the energy transition. Although it is being presented as a growth opportunity, it is emerging as a venue of geopolitical competition. The critical minerals race and green technology subsidies, and battery supply chains are reproducing the zero-sum game of the Cold War. Rather than a concerted effort towards attaining sustainability, what we are witnessing is a mad dash to gain superiority, a factor that continues to increase world inequality.

The most incriminating thing about the World Bank prediction perhaps is that it does not say anything about inequality. Not that it is irrelevant, but because it is so basic that it is become unseen. The problem of inequality is no longer a moral problem. It is economical one. Inequality at high levels will depress aggregate demand; it will also skew political incentives; and it will undermine trust in institutions. It is what makes numerous growth estimations, even when materialised, not convert into actual enhancements in living standards.

That is the paradox of our era: we are in a time of enormous technological possibility: AI, biotechnology, quantum computing but the fruits of this innovation are becoming concentrated in an ever-narrower elite. Structural divide between capital and labour, between productivity and wages, is no longer a bug of capitalism. It is what defines it. Unless there is a fundamental re-think of redistribution, inclusive finance and labour policy, any level of growth will not be socially sustainable.

The 2025 forecast by the World Bank, in all probability, for the first time in an unambiguous manner, makes obvious the fact that the global economic growth can no longer be considered a given. Gone are the days of the age of convergence when the developing countries would close the gap with the West by way of liberalisation and integration. The future is becoming a divergent one – between the haves and have-nots, between technology and society, between country and planet.

This does not only require new policies, but a new paradigm. In itself, growth can no longer be the measure of the progress of man. Instead, we need to put more challenging questions: Growth, whose? At what Price? in what circumstances? Unless the trend of the 2020s is reversed, this could be the first growth-redefining decade in modern history, but unfortunately, it will not be an aspiration, but a privilege.

Finally, the report of the World Bank is not only a prediction. It is a funeral oration of a paradigm of development that has become obsolete. The issue is not can we go back to growth, but can we re-invent growth. And therein the danger and the hope of our era lie.