EconToMarks Deep Dive · 11 June 2026
World Bank forecasts developing-economy growth slowing to 3.6% in 2026
The World Bank's June 2026 Global Economic Prospects forecast developing-economy growth slowing from 4.4% in 2025 to 3.6% in 2026. More importantly for A-Level evaluation, the Bank said developing economies excluding China and India are approaching a decade with almost no progress in narrowing the per-capita income gap with advanced economies. This makes the release a strong growth-versus-development case.
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What happened
The World Bank forecast global growth of 2.5% in 2026 and developing-economy growth of 3.6%, down from 4.4% in 2025. It warned that developing economies other than China and India would by 2028 have collectively experienced nearly a decade without progress in narrowing their per-capita income gap with advanced economies. The report also highlighted the fiscal vulnerability created by commodity dependence and rising public debt.
Why it matters
A country can record positive real GDP growth while making limited progress in economic development. If population rises quickly, income per head can grow much more slowly than total GDP. If growth is concentrated in commodity sectors or its gains are unevenly distributed, poverty, health, education and living standards may improve less than headline growth suggests. Fiscal weakness can further restrict investment in infrastructure and human capital.
Relevant theory
Connect the event to the syllabus.
Key evidence
Developing-economy growth
The World Bank forecasts growth in developing economies slowing from 4.4% in 2025 to 3.6% in 2026 before recovering to 4.2% in 2027.
Income-convergence warning
By 2028, developing economies excluding China and India are expected collectively to have experienced nearly a decade of no progress in narrowing their per-capita income gap with advanced economies.
Commodity dependence
About two-thirds of developing economies and nearly 90% of low-income countries are commodity exporters, exposing fiscal revenues to volatile world prices.
Debt constraint
The World Bank says aggregate government debt in developing economies has risen from under 40% of GDP in 2010 to more than 70%, reducing fiscal space in many countries.
Best diagram
PPF or LRAS diagram showing an increase in productive capacity, followed by evaluation of why higher real GDP does not automatically equal economic development
- 1Draw a PPF or LRAS diagram and show an outward shift to represent a rise in an economy's productive capacity.
- 2Explain that this can support higher real GDP and therefore economic growth.
- 3Then separate growth from development: the diagram does not show income distribution, health, education, poverty, environmental quality or institutional strength.
- 4Use the World Bank's per-capita income-gap evidence to show why total output growth may fail to produce convergence in living standards.
- 5Evaluate whether growth is inclusive, sustainable and converted into public and private investment that raises long-run capabilities.
Chain of analysis
Step 1
Developing-economy real GDP growth slows from 4.4% to a forecast 3.6%.
Step 2
Slower output growth can weaken job creation, household income growth and government tax receipts compared with a stronger-growth path.
Step 3
If population growth remains high, growth in real GDP per capita can be considerably weaker than growth in total real GDP.
Step 4
Lower income-per-head growth makes convergence with richer economies slower and can reduce the resources available to improve health, education and infrastructure.
Step 5
Commodity-dependent economies can face an additional problem because volatile export prices make national income and government revenue unstable.
Step 6
Development outcomes therefore depend on the quality, distribution and resilience of growth, not only the headline GDP rate.
Counter-case
When might the main chain weaken?
Use these conditions to challenge the initial mechanism rather than assuming the effect is automatic.
GDP per capita matters more than total GDP
A 3.6% real-GDP growth rate can translate into a much smaller improvement in average living standards where population is also growing quickly.
Distribution of growth
Growth concentrated among high-income households, capital owners or a narrow export sector may leave poverty and inequality little changed even when national GDP rises.
Commodity dependence creates volatility
With about two-thirds of developing economies dependent on commodity exports, a favourable growth year can reverse quickly when world prices fall. Diversification and fiscal institutions affect whether temporary revenue becomes lasting development.
Government capacity and debt
High debt and borrowing costs can crowd out health, education and infrastructure spending. Two countries with the same growth rate can therefore produce very different long-run development outcomes.
The average hides regional differences
The developing-economy aggregate includes very different economies. Country-specific institutions, conflict exposure, demographics and policy choices can make outcomes much stronger or weaker than the 3.6% average.
Judgement
Real GDP growth is neither necessary nor sufficient evidence of broad development. The outcome depends on population growth, income distribution, the sectors driving growth, institutions, public spending quality, debt constraints and exposure to commodity-price shocks. Regional differences are large, so a global developing-economy average should not be treated as every country's experience.
Use it in a 15-marker
Use one or two pieces of the key evidence, explain the mechanism clearly, and use the diagram to anchor the causal chain. Keep evaluation focused on the condition in the judgement rather than adding unrelated points.
Use it in a 25-marker
Use 3.6% versus 4.4% as the current growth evidence, but make the per-capita income-gap warning the centre of the analysis. That lets you distinguish economic growth from economic development rather than treating the terms as synonyms. Strong evaluation should then test population growth, distribution, commodity dependence, debt and public investment before judging whether growth will improve living standards.
Practice question
Evaluate the view that faster economic growth will always lead to higher living standards in developing economies.
Sources and update note
Forecasts and structural facts are taken from the World Bank's June 2026 Global Economic Prospects release. Development effects are analytical channels and vary substantially across countries; forecasts are not guaranteed outcomes.