The report argues that emerging economies have more to gain and less to fear from AI than advanced nations, urging policymakers to embrace the technology rather than risk missing another transformative industrial revolution.

“AI has thrown developing economies a lifeline, and they should seize it. They do not need large models or big data centers to reap its benefits. By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions. But they must hurry: AI is spreading faster and is more context-specific than earlier general-purpose technologies like electricity and the internet. World Development Report 2026 shows how developing countries are responding—and succeeding,” said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group.

The World Bank said AI-powered applications could help health workers diagnose diseases more quickly, enable teachers to improve lesson planning, assist farmers with crop selection and weather forecasting, and expand access to public services in underserved communities.

For the 6.8 billion people living in low- and middle-income economies, AI solutions will need to be tailored to local realities, including voice-based services for people without smartphones or literacy skills. The report stressed that importing an AI model alone would not guarantee effective results without localisation and reliable local data.

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Contrary to fears of widespread automation, the report found that only 4.5% of jobs in low- and middle-income countries face significant exposure to generative AI, compared with 14.2% in high-income economies. At the same time, around 16.2% of jobs in developing countries could see meaningful productivity gains, broadly comparable with the 18.7% expected in richer nations.

To unlock these benefits, the World Bank called for sustained investment in electricity generation and distribution, broadband connectivity, computing infrastructure, and digital skills, alongside wider access to smartphones and other digital devices.

“None of this is possible without first investing in the basics.” The report used these exact words to prove its point. It also used Sub-Saharan Africa as a good example; nearly one-third of rural schools still lack reliable electricity, and well over two-thirds have been deprived of dependable internet access.

“Closing this gap is already a priority — the World Bank Group is working with partners through Mission 300 to provide energy access to 300 million people across Sub-Saharan Africa by 2030, laying the foundation for broader digital and AI inclusion,” the study noted.

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“Countries also need to expand access to computing power and improve the availability of local data, including in local languages, so AI tools can be tailored to serve their own people and economies. Governments should make it easier for new firms to attract investment, test ideas, and scale what works. Many AI pilots are already underway, but the bigger challenge is knowing which ones deliver results. Better evidence, stronger skills, and clearer procurement and evaluation frameworks will be essential,” the World Bank added further.

Building public trust is equally important. As AI evolves rapidly, the global body advised the governments to begin their policy responses by drawing on voluntary industry standards to encourage the technology’s responsible use, anchored in international cooperation to prevent regulatory fragmentation.

“When voluntary measures fall short, governments should apply existing laws to address the harms directly. Improved public services and better learning outcomes in schools will reinforce trust—but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover,” the World Bank noted.

However, it cautioned that AI could also deepen inequality, spread misinformation, concentrate market power, and erode trust in public institutions if deployed without adequate safeguards for privacy, transparency, and accountability.

“The window to get this right is narrow. AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations. Developing countries that build the foundations now—power, connectivity, skills, and institutions—will be positioned to adopt and adapt AI for their people,” said Gaurav Nayyar, Director of the World Development Report 2026.

The report concluded by stating that timely adoption of AI could help lift growth, strengthen public services, and improve living standards across the developing world.

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Global growth reached 2.9% in 2025, up 0.2 percentage point from its estimate in January. Its 2026 forecast is down 0.1 percentage point from January, the lowest seen since the COVID pandemic that began in late 2019,” the bank said in its semi-annual Global Economic Prospects.

The global monetary body has lowered forecasts for two-thirds of countries as a result of the war, with the biggest cuts affecting the United Arab Emirates (UAE), Iraq, and other Gulf countries whose energy trade has been hit hard by the conflict, especially due to the Hormuz stalemate.

The World Bank’s stark outlook comes as the war launched by the United States and Israeli strikes on Iran on February 28 drags into the fourth month. The disruptions at Hormuz (with international shipping and energy trade coming under the line of fire) have sent energy prices up sharply, renewing inflationary pressures worldwide and fuelling expectations of tighter monetary policy across the ⁠countries. Fertilizer prices have also gone up sharply, raising concerns about a major food supply crisis.

As per the World Bank’s projections, the average Brent crude oil price may remain at USD 94 for the year, up 36% from 2025. However, the worst disruptions to energy supplies will likely become less severe by the end of July, with global headline inflation seen at 4%.

“Growth could slow to 2.1% if the energy disruptions lasted longer and oil ‌prices averaged USD 115 per barrel ⁠this year, which could drive inflation to ⁠4.4%. The outlook would worsen further, with growth decelerating to just 1.3%, if the energy shock affected financial markets, resulting in lower energy prices, greater volatility, and weaker confidence,” the World Bank noted.

“These risk scenarios show how quickly the outlook could weaken if energy and financial pressure reinforce each other. If the energy shock triggered ‌a financial market shock, confidence could erode quickly,” said Ayhan Kose, the World Bank’s deputy chief economist.

“The global growth may improve ⁠to 2.8% in 2027 and 2028, but the projected figure remains 0.4 percentage points below the average rates seen during the 2010s due to a slew of factors, including slower population growth, slower private investment growth, falling public investment, rising public debt, and slower growth in trade,” World Bank chief economist Indermit Gill said.

“The world economy is a lot less resilient today than it was in 2008 and even as compared with 2018,” Gill noted, predicting the next few years would be marked by high policy uncertainty, inflationary pressures, and high interest rates.

“Weak growth in developing economies has stalled progress toward advanced-economy income levels, with dozens of developing countries other than China and India looking at a “lost decade” in which they saw no progress on narrowing their per capita income gap with advanced economies,” the Global Economic Prospects remarked.

Developing economies have been hit harder by the war, with the World Bank now projecting growth at a post-pandemic low of 3.6% this year, down from 4.4% in 2025. For the American economy, the bank maintained its forecast of 2.2% growth, but that could taper off to 2.1% in 2027 and 2% in 2028. The euro area was expected to ‌grow by 0.8% in 2026, down from 1.4% in 2025. Japan’s GDP was forecast to grow 0.7% in 2026, down ⁠from 1.1% in 2025.

The World Bank forecast GDP growth of 4.2% in China in 2026, a downward revision of 0.2 percentage point, after 5% growth in 2025.

However, the GDP trajectory of the Middle East, North Africa, Afghanistan, and Pakistan will see a massive downward direction, with the ratio getting stuck at 1.6% in 2026, down from 4% in 2025. However, growth in these regions, in 2027, will likely rebound to 5%.

“India remained the fastest-growing large economy in the world, ⁠with its GDP seen growing by 6.6% in 2026, after growth of 7% in 2025. Growth rates in India were expected to remain fairly high for the next two decades,” Gill concluded.

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