The World Bank has downgraded its global growth forecast, predicting the slowest growth of any non-recessionary year since 2008. The group attributes this slowdown to tariff policies and economic uncertainty, which have crushed prospects for a “soft landing.”
According to Indermitt Gill, chief economist at the World Bank, the global economy was on track for stabilization after years of calamities, but that moment has passed. Instead, the world economy is now facing turbulence.
The World Bank projects a 2.3% growth rate this year, which is the slowest pace in 17 years, excluding outright recessions in 2008 and 2020. The forecast was downgraded by 0.4 percentage point due to gloomier expectations for the US and other large economies.
The US is expected to grow at a rate of 1.4% this year, nearly a full percentage point below its initial estimate. The World Bank believes that Trump’s trade policies will have a negative impact on growth, with tariff levels sticking in place through the years ahead.
The organization anticipates a “tepid recovery” over the next two years, leaving global output significantly lower than expected just months ago. If tariff levels are halved from late May, it would add 0.2 percentage point to global growth between 2025 and 2026.
Global trade growth is also expected to slow, with the World Bank estimating a decline to 1.8% this year, below the 3.4% growth rate in 2024. The organization warns that global trade will not recover to pre-pandemic norms in the years ahead, suggesting permanent damage to trade flows.
High debt levels, geopolitical strife, and the end of record-low interest rates are among the factors contributing to this slowdown. According to Gill, “Many of the forces behind the great economic miracle of the last 50 years… have swung into reverse.”
Source: https://www.axios.com/2025/06/10/global-economy-world-bank-trade