Several countries are expected to enter into economic contraction or experience negative growth in 2025, according to the World Bank’s latest outlook in the June 2025 edition of the Global Economic Prospects (GEP).

World Bank Group Chief Economist Indermit Gill stated that this economic slowdown stems from three decades of weakening global growth. Contributing factors include geopolitical conflicts, trade wars, falling productivity, aging populations, and elevated levels of debt.

Growth in developing countries has steadily declined, from an average of 6% in the 2000s to 5% in the 2010s, and now less than 4% in the 2020s. This trend mirrors the deceleration in global trade growth, which dropped from 5% in the 2000s to around 4.5% in the 2010s, and now stands below 3% in the current decade.

“Outside of Asia, the developing world is turning into a no-growth zone,” said Indermit Gill in an official statement on Thursday (June 12, 2025).

Countries Likely to Experience Economic Contraction

The countries forecasted to have negative economic growth in 2025 are spread across four regions: East Asia and the Pacific, Latin America and the Caribbean, the Middle East and North Africa, and Sub-Saharan Africa.

East Asia and the Pacific

In this region, Myanmar is projected to undergo a contraction of -2.5% in 2025. This is a steep revision from the January 2025 forecast which anticipated 2% growth. However, Myanmar’s economy is expected to rebound to 3% growth in 2026.

The World Bank attributes Myanmar’s economic challenges to ongoing armed conflict and natural disasters such as the 7.7 magnitude earthquake in March 2025.

“Persistent armed conflict could further depress economic activity in Myanmar, trigger inflation, weaken business sentiment, and force population displacement,” stated the World Bank.

Another country facing a downturn in this region is Vanuatu, which is now projected to shrink by -1.8%, compared to a January projection of 1.5% growth. Vanuatu’s economy is expected to improve to 2.3% growth in 2026, slightly higher than the previous forecast of 2.1%.

Vanuatu’s vulnerability to natural disasters is cited as a major risk.

“Susceptibility to natural disasters remains a significant downside risk, as evidenced by the severe damage from major earthquakes in Myanmar and Thailand in March and in Vanuatu late last year,” the World Bank noted.

Latin America and the Caribbean

In this region, Haiti is expected to see its economy contract by -2.2% in 2025, a significant downgrade from the January estimate of 0.5% growth. The economy is forecast to grow by 2% in 2026, up from the earlier projection of 1.5%.

“Haiti’s economic outlook remains fragile and uncertain amid ongoing political instability and security issues,” said the World Bank.

Middle East and North Africa

Three countries in this region—Iran, the West Bank and Gaza, and Yemen—are expected to post negative growth in 2025.

Iran is projected to contract by -0.5% but is forecast to recover to 0.3% growth in 2026. The World Bank attributes the decline to lower oil demand from China, energy shortages, and rising uncertainties affecting the non-oil sector.

The West Bank and Gaza are expected to contract by -1.6% due to war-related damage from the conflict with Israel. Growth is projected to surge to 4% in 2026 and further to 16% in 2027, assuming reconstruction begins in 2026.

Yemen’s economy is forecast to decline by -1.5% in 2025 and grow modestly by 0.5% in 2026. “Given the security conditions, Yemen’s GDP is expected to contract again this year,” said the World Bank.

Sub-Saharan Africa

In Sub-Saharan Africa, Equatorial Guinea is the only country forecast to contract, with a projected -3.1% in 2025. It is expected to recover slightly to 0.6% in 2026 but may contract again by -1.1% in 2027.

What About Indonesia?

Indonesia is forecast to grow by 4.7% in 2025 and 4.8% in 2026, down from the January 2025 projection of 5.1% for both years.

Indonesia’s economic growth is expected to return to 5% by 2027—still lower than the 5.3% achieved in 2022.

The World Bank also noted that global trade tensions triggered by high tariffs and policy uncertainty have led to growth downgrades in nearly 70% of countries across all income groups and regions.