Behind the global growth headlines sits a quieter and more troubling trend: emerging market and developing economies are seeing the weakest per capita income growth since the pandemic, a setback that threatens years of catch-up progress for the world's poorer nations.
Convergence stalls
For decades, the promise of development economics was convergence, the idea that lower-income countries would grow faster than rich ones and gradually close the gap. That process has stalled. With per capita income growth across emerging and developing economies (EMDEs) at its softest post-pandemic pace, the distance between the world's richest and poorest citizens is widening rather than narrowing.
The IMF trimmed its emerging-market growth forecast for 2026 to around 3.9 percent, down from an earlier 4.2 percent estimate, while the World Bank projected global growth slowing to roughly 2.5 percent before firming later in the decade. Population growth in many of these economies means headline GDP gains translate into far smaller per-person improvements.
The forces holding growth back
- Rising debt costs: Higher borrowing costs are hitting the most indebted countries hardest, diverting revenue toward interest payments.
- Energy price shocks: Conflict-driven energy spikes hurt commodity importers with existing vulnerabilities.
- Weaker trade: Softer global demand and shifting trade rules reduce export opportunities.
- Limited fiscal space: Constrained budgets leave little room for growth-supporting investment.
Why per capita matters
Aggregate GDP figures can flatter economies with fast-growing populations. Per capita income is closer to lived experience, tracking whether the average person is actually becoming better off. When that measure stalls, it signals rising poverty risks, strained public services, and mounting social pressure, regardless of what the top-line growth number shows.
Development lenders have emphasized stronger revenue mobilization and improved debt management as priorities. Without them, indebted economies risk a cycle in which high borrowing costs crowd out the investment needed to lift long-run growth.
Paths back toward convergence
- Debt restructuring and better management to free up fiscal room.
- Domestic revenue reforms to fund investment without added borrowing.
- A calmer commodity backdrop to relieve import-dependent economies.
The stakes
Forecasts are uncertain and can improve if energy prices ease and trade recovers. But the current trajectory carries real human consequences. A prolonged stretch of weak per capita growth can entrench poverty and inequality that take years to unwind. The gap between rich and poor economies, narrowing for much of the past generation, is once again at risk of widening, and reversing that drift will require both stronger domestic policy and a more supportive global environment.