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World Bank Forecasts Global Economy To Grow 2.7% In 2025 And 2026, Marking A Period Of Stabilization

The global economy is projected to grow by 2.7% in 2025 and 2026, maintaining the same pace as in 2024, according to the latest report from the World Bank. This steady growth signals a phase of stabilization, with inflation and interest rates expected to gradually decrease.

For developing economies, growth is expected to remain resilient over the next two years, holding steady at around 4%. However, this growth is still constrained compared to pre-pandemic levels, raising concerns about the ongoing challenge of poverty reduction and broader development goals.

The World Bank highlighted that developing economies, which account for 60% of global growth, are likely to conclude the first quarter of the 21st century with the weakest long-term growth prospects since 2000. The first decade of the century saw remarkable growth, but the aftermath of the 2008 financial crisis, along with other global challenges, has slowed down progress.

Economic integration has weakened, as foreign direct investment (FDI) inflows and GDP share in developing economies are now roughly half of what they were in the early 2000s. Meanwhile, global trade restrictions have surged in 2024, with new barriers reaching five times the average of the 2010-2019 period. As a result, global economic growth has diminished, dropping from 5.9% in the 2000s to 5.1% in the 2010s, and now to 3.5% in the 2020s.

In a statement, Indermit Gill, the World Bank’s chief economist, expressed concern over the future challenges facing developing economies: “The next 25 years will be tougher than the last 25. Most of the factors that once boosted their rise have faded. In their place, we now face tough headwinds: high debt, weak investment, slow productivity growth, and the escalating costs of climate change.”

The report also noted the potential impact of US President-elect Donald Trump’s plan to implement a 10% tariff across a wide range of imports. This could further hinder an already sluggish global economic recovery.

However, there is still hope for stronger-than-expected growth if the world’s largest economies, particularly the US and China, regain momentum.

The increasing importance of developing economies is evident in the shifting global economic landscape. Developing nations now represent 45% of global GDP, up from just 25% in 2000. This growth is largely driven by rapid urbanization, industrialization, and technology adoption in regions like Asia, Africa, and Latin America.

Key factors fueling this expansion include the rise of the middle class, infrastructure development, and an expanding services sector. The World Bank reports that more than 40% of exports from developing economies now go to other developing nations, a significant increase from 20% in 2000. Additionally, these countries are becoming crucial sources of capital flows, remittances, and development aid to others.

M Ayhan Kose, the World Bank’s deputy chief economist, emphasized that developing economies must adopt bold, innovative policies to capitalize on new opportunities for cross-border cooperation amid a landscape shaped by policy uncertainty and escalating trade tensions.

Strained Household Finances: Eurostat Data Reveals Persistent Payment Delays Across Europe and in Cyprus

Improved Financial Resilience Amid Ongoing Strains

Over the past decade, Cypriot households have significantly increased their ability to manage debts—not only bank loans but also rent and utility bills. However, recent Eurostat data indicates that Cyprus continues to lag behind the European average when it comes to covering financial obligations on time.

Household Coping Strategies and the Limits of Payment Flexibility

While many families are managing their fixed expenses with relative ease, one in three Cypriots struggles to cover unexpected costs. This delicate balancing act highlights how routine payments such as mortgage installments, rent, and utility bills are met, but precariously so, with little room for unplanned financial shocks.

Breaking Down Payment Delays Across the European Union

Eurostat reports that nearly 9.2% of the EU population experienced delays with their housing loans, rent, utility bills, or installment payments in 2024. The situation is more acute among vulnerable groups: 17.2% of individuals in single-parent households with dependent children and 16.6% in households with two adults managing three or more dependents faced payment delays. In every EU nation, single-parent households exhibited higher delay rates compared to the overall population.

Cyprus in the Crosshairs: High Rates of Financial Delays

Although Cyprus recorded a notable 19.1 percentage point improvement from 2015 to 2024 in delays related to mortgages, rent, and utility bills, the island nation still ranks among the top five countries with the highest delay rates. As of 2024, 12.5% of the Cypriot population had outstanding housing loans or rent and overdue utility bills. In contrast, Greece tops the list with 42.8%, followed by Bulgaria (18.7%), Romania (15.3%), Spain (14.2%), and other EU members. Notably, 19 out of 27 EU countries reported delay rates below 10%, with Czech Republic (3.4%) and Netherlands (3.9%) leading the pack.

Selective Improvements and Emerging Concerns

Between 2015 and 2024, the overall EU population saw a 2.6 percentage point decline in payment delays. Despite this, certain countries experienced increases: Luxembourg (+3.3 percentage points), Spain (+2.5 percentage points), and Germany (+2.0 percentage points) saw a rise in payment delays, reflecting underlying economic pressures that continue to challenge financial stability.

Economic Insecurity and the Unprepared for Emergencies

Another critical indicator explored by Eurostat is the prevalence of economic insecurity—the proportion of the population unable to handle unexpected financial expenses. In 2024, 30% of the EU population reported being unable to cover unforeseen costs, a modest improvement of 1.2 percentage points from 2023 and a significant 7.4 percentage point drop compared to a decade ago. In Cyprus, while 34.8% still report difficulty handling emergencies, this marks a drastic improvement from 2015, when the figure stood at 60.5%.

A Broader EU Perspective

Importantly, no EU country in 2024 had more than half of its population facing economic insecurity—a notable improvement from 2015, when over 50% of the population in nine countries reported such challenges. These figures underscore both progress and persistent vulnerabilities within European households, urging policymakers to consider targeted measures for enhancing financial resilience.

For further insights and detailed analysis, refer to the original reports on Philenews and Housing Loans.

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