The post-pandemic recovery: Stronger than expected, but not for everyone

The global economy has staged a remarkably strong recovery from the pandemic. Five years after the 2020 global recession, global income per person is about 10 percent higher than in 2019, making this rebound stronger than the recovery that followed the 2009 global financial crisis. This resilience is extraordinary given the succession of shocks that followed the pandemic—from severe supply chain disruptions and the surge in inflation to the sharpest global monetary tightening in decades and rising geopolitical tensions.

Yet this headline success hides an uncomfortable reality: the recovery has been deeply uneven. While advanced economies have rebounded strongly, many emerging market and developing economies (EMDEs), particularly the most vulnerable, are still struggling to regain lost ground. This divergence matters greatly because many of these economies must generate millions of jobs for rapidly expanding young populations in the years ahead.
 

Two global recessions, two different recoveries

The world experienced two global recessions in the first quarter of this century: in 2009, during the global financial crisis, and in 2020, when the COVID-19 pandemic triggered the deepest global downturn since World War II. The 2020 recession was also the most synchronized in recent decades, with nearly 90 percent of economies experiencing declines in per capita GDP. Economic activity collapsed as governments implemented lockdowns and travel restrictions to contain the virus.

Despite the severity of the initial downturn, the subsequent recovery proved remarkably resilient. Five years after the pandemic, global per capita GDP has risen about 10 percent above its 2019 level (Figure 1). But this global strength masks large differences across countries.

A widening gap between advanced economies and EMDEs

Advanced economies have experienced a robust recovery. Over the five years (2021–25) following the pandemic global recession, their per capita GDP increased by about 13 percent, almost twice the pace recorded during the recovery from the 2009 global recession.

In contrast, the recovery has been considerably weaker across EMDEs. Their cumulative per capita income growth during 2021–25 was about three percentage points lower than during the recovery following the global financial crisis. More strikingly, many of these economies have yet to fully recover from the pandemic shock. In more than one-quarter of EMDEs, per capita GDP in 2025 remained below its pre-pandemic level (Figure 2). In advanced economies, by contrast, per capita GDP exceeded its pre-pandemic (2019) level in nearly 90 percent of countries.
 

Vulnerable economies are falling further behind

The weakest recoveries have been concentrated among the most vulnerable economies—countries eligible for support from the International Development Association (IDA), low-income countries (LICs), and fragile and conflict-affected situations (FCS). In nearly 60 percent of FCS, per capita GDP in 2025 is still lower than before the pandemic.

The weak recovery is reversing decades of progress in income convergence with advanced economies. Instead of gradually catching up, many vulnerable economies are now falling further behind. Between 2019 and 2025, the gap in per capita income between LICs and advanced economies widened by about 10 percent (Figure 3). In FCS, the gap widened even more.

Across regions, the pattern is broadly similar. Many economies in Sub-Saharan Africa, Latin America and the Caribbean, and parts of the Middle East and North Africa have seen slower income convergence with advanced economies since the pandemic (Figure 4).

A growing jobs challenge

Weak economic recoveries have significant implications for global labor markets. Over the next decade, 1.2 billion young people are expected to enter the labor force in EMDEs. At the same time, growth has become more difficult to generate in the post-pandemic global environment.

This combination is intensifying what is already a major development challenge: creating enough jobs for rapidly expanding youth populations. The pressure is particularly acute in the most vulnerable economies, where young people account for a much larger share of the population than in other developing countries (Figure 5). Without stronger growth, labor markets in many of these economies will struggle to absorb new entrants.

Limited policy space and a tougher external environment

Policy constraints have also contributed to the divergence in recoveries. Prior to the global financial crisis, many EMDEs had built policy buffers through sustained reform efforts and stronger macroeconomic management. These buffers allowed them to implement countercyclical fiscal and monetary policies to support economic activity during the 2009 recession (Figure 6). By contrast, many EMDEs entered the pandemic with higher public debt and larger fiscal deficits, limiting their ability to respond to the shock and support the recovery.

At the same time, the external environment has become markedly more challenging. Global trade growth has slowed sharply, partly reflecting a surge in trade restrictions that has pushed policy uncertainty to record highs. Geopolitical tensions have intensified, contributing to higher oil prices and heightened uncertainty and volatility in global commodity markets.
 

Rebuilding the foundations for jobs and growth

The uneven recovery highlights the difficult path ahead for many developing economies. Higher debt burdens, weaker growth prospects, and a more uncertain global environment are making it harder to generate the sustained growth needed to create jobs and reduce poverty.

The experience following the 2009 global recession offers an important lesson. Many EMDEs were able to sustain strong growth during that period because earlier structural reforms had strengthened macroeconomic policy frameworks, improved investment climates, and rebuilt policy buffers.

Reestablishing these foundations will be essential in the years ahead. Without stronger growth, the employment challenge in developing economies will become even more daunting. Over the next decade, labor markets in EMDEs will need to absorb hundreds of millions of new workers. Creating sufficient opportunities for this rapidly expanding workforce will require renewed efforts to invest in foundational infrastructure, including physical, human, and digital capital, to improve the business environment, and to mobilize private capital.

The great news of the 2020s is that the global recovery has so far been stronger than expected. Sustaining this momentum, extending it to a broader range of EMDEs, and accelerating job creation could help ensure meaningful economic opportunities for young people entering adulthood.