The World Bank has lowered its global growth forecast for 2025, citing a “significant headwind” from higher tariffs and heightened uncertainty. The bank’s twice-yearly Global Economic Prospects report slashed the forecast by four-tenths of a percentage point to 2.3%, warning that nearly all economies would be impacted.
Higher US tariffs, triggered by President Donald Trump’s erratic trade policies, have led to increased trade tensions with China and other countries. The World Bank expects global trade growth to slow to 1.8% in 2025, down from 3.4% last year, and inflation to reach 2.9%.
The bank said that a further escalation of US tariffs could shave another half of a percentage point off the outlook for 2025, resulting in “global trade seizing up” and widespread confidence collapse. However, it also noted that the risk of a global recession is less than 10%.
Poor countries would be hit hardest by the reduced growth forecast, with developing economies’ per capita GDP expected to be 6% below pre-pandemic levels by 2027, taking two decades to recover.
The World Bank’s Deputy Chief Economist, Ayhan Kose, said that while uncertainty remains a powerful drag, signs of increased dialogue on trade could help dispel it. Supply chains are adapting to the new global trade map, and global growth is expected to modestly rebound in 2026 to 2.4%.
Source: https://www.reuters.com/world/china/world-bank-slashes-global-growth-forecast-trade-tensions-bite-2025-06-10