In a sobering and timely assessment, the World Bank’s 2025 flagship report The Great Reversal reveals a historic setback in global development, particularly for the world’s most vulnerable economies, those eligible for support from the International Development Association (IDA). IDA countries, home to 1.9 billion people in the world or nearly a quarter of the global populationare primarily located in Sub-Saharan Africa, East Asia, and South Asia. The report reveals that except India, all Asian countries are under IDA list.
Sifting the findings, there comes alarming information that most of IDA countries are enveloped with large and growing population, contributing 3% to global economic output.These 75 countries, representing almost one-quarter of the global population, contribute a mere 3% to global output and harbor over 70% of the world’s extreme poor. The IDA countries, once on a steady path of economic and social improvement, now face an unprecedented convergence of crises that threatens to reverse decades of progress. However, the main reasons of the crisis is an escalation in geopolitical tensions, fragmentation of trade and investment networks, weaker-than-expected near-term growth in major economies, or any combination of these factors could impede growth in IDA countries. Many IDA countries are in debt distress.
The COVID-19 pandemic marked the beginning of a devastating period for IDA countries. In 2020, their average GDP growth fell to just 0.3%, the lowest since the early 1980s. While many economies globally rebounded strongly in 2021, IDA countries lagged behind. Fragile and conflict-affected states (FCS) and small island states were especially hard-hit, with the latter suffering a staggering 12.4% contraction in output in 2020. Growth in these economies rebounded only modestly to 6.2% in 2021 and has since plateaued at a lower trajectory. By 2024, the cumulative output loss in IDA countries is projected to reach 5.7% relative to pre-pandemic trends. More alarmingly, one in three IDA countries is expected to have a lower per capita income in 2024 than in 2019.
This period of overlapping crises, COVID-19, Russia’s invasion of Ukraine, global inflation, tightening monetary policies, and climate-related shocks has culminated in what the report terms “The Great Reversal.” It is astonishing to note that a half of IDA countries are now growing more slowly than advanced economies, and the income gap with high-income nations is widening for the first time in decades. The share of people living in extreme poverty in IDA countries was estimated at 26.5% in 2023, over eight times the global average. In raw numbers, nearly 500 million people are living below the international poverty line of $2.15 per day, and more than 650 million people in IDA countries are food insecure, an alarming 92% of the global total.
We not make only COVID-19, a change agent of global economy, but these challenges are compounded by structural constraintscharacterized by weak institutions, low revenue generation, and persistent fiscal and current account deficitsinter alia fragile political and governance strength. Government revenues in these countries average just 11.9% of GDP is far below the 17.1% seen in other emerging markets and developing economies (EMDEs). Their limited fiscal space translates into underinvestment in critical areas: health spending averages only 1.6% of GDP and education 3.6%, compared to 2.9% and 4.1%, respectively, in other EMDEs. The informal sector accounts for 36% of IDA economies, further undermining revenue collection and labor productivity.
Furthermore, climate vulnerability is acute. On average, IDA countries lose 1.3% of GDP annually due to natural disasters are more than double the losses experienced by non-IDA EMDEs. The Sahel region, in particular, is warming faster than the global average and facing intensifying desertification. The frequency and severity of climate-related events such as floods, droughts, and cyclones have increased, disproportionately affecting agricultural production and livelihoods in countries where subsistence farming remains predominant.
The 75 economies eligible for grants and low-interest loans from the IDA represent nearly one-fourth of the global population, yet they account for more than 70 percent of the world’s extreme poor. These countries face significant development challenges, particularly in respect to health, education, and infrastructure, and they are especially vulnerable as a result of violent conflict-affected situations and exposure to natural disasters. Limited fiscal space, weak institutional capacity, and underdeveloped financial sectors further complicate efforts to overcome these challenges.
Yet, amidst this bleak outlook, the report identifies reasons for cautious optimism. Historically, several countriesincluding China, India, and the Republic of Koreawere once IDA recipients and have since transitioned into major global economies. Today’s IDA countries similarly possess untapped potential. Many are richly endowed with natural resources, including critical minerals essential for the global green energy transition. Moreover, they are poised to benefit from a growing working-age population, in stark contrast to aging populations in developed economies. If harnessed strategically, this demographic dividend could significantly boost productivity and economic growth.
However, realizing this potential demands ambitious and comprehensive policy reforms. National governments must focus on restoring macroeconomic stability, increasing domestic revenue, and enhancing institutional quality. Investments in human capital, particularly in education, health, and gender equity are essential to unlock inclusive growth. Digital transformation and climate resilience must also be prioritized to bridge infrastructure gaps and withstand future shocks.
The international community has a crucial role to play. The report emphasizes that strong, sustained global support is essential to avert a “lost decade” for development. This includes scaled-up concessional finance, coordinated debt restructuring for countries in distress, and renewed efforts to counter global trade fragmentation. Failure to act decisively would not only derail development in IDA countries but also undermine global prosperity and peace.
To transform this historic setback into a springboard for inclusive development, both national and international actors must act decisively and in coordination. For IDA countries, the imperative is clear: they must implement ambitious, well-designed policy packages that restore fiscal sustainability, strengthen institutions, and unlock investment in human capital, climate resilience, and digital infrastructure. These reforms are not optional, but quintessential for sparking the sustained investment accelerations needed to close income gaps, reduce poverty, and build resilience against future shocks.
At the same time, the global community must redouble its support. This includes expanding access to concessional finance, ensuring more timely and effective debt restructuring, and promoting cross-border trade and investment to counteract rising fragmentation. As the report underscores, strong and sustained global cooperation, particularly in the face of climate change and global financial tightening, is critical to averting a lost decade in development. The lesson of history is unequivocal: when global institutions and national leaders align in purpose, even countries facing immense challenges can achieve transformational outcomes. The world’s shared prosperity, security, and climate future depend on whether we rise to this challenge together – reversing decline not by retreating inward, but by enabling IDA countries to become engines of growth, equity, and resilience in the global economy.
The Great Reversal is not just a diagnosis but more an-eye opener, a way forward, an staunch harbinger and it most importantly a call to action. The report makes it vividly clear that the fate of IDA countries is intimately tied to the future of global development. Without urgent reforms and robust global cooperation, the risk of deepening inequality, entrenched poverty, and prolonged stagnation looms large. But with the right mix of national leadership and international solidarity, IDA countries can chart a course toward resilience, growth, and shared prosperity. Hence, helping IDA countries is ensuring global peace and tranquility being the legitimate right of every individual is also supported as per UN charter.
