World Bank Cuts Global Growth Forecast Amid Trade Tensions and Tariff Uncertainty
Washington: The World Bank has sharply downgraded its global economic outlook for 2025, warning that escalating trade barriers — largely driven by policies linked to former U.S. President Donald Trump — are weighing heavily on global growth.
In its latest Global Economic Prospects report, the bank projects the U.S. economy will grow by just 1.4% this year, down from 2.8% in 2024 and below the 2.3% growth it had forecast in January. The downgrade reflects the impact of sweeping tariffs imposed on imports from multiple countries, which have increased domestic costs and triggered retaliatory measures abroad.
Without naming Trump directly, the report cited “a substantial rise in trade barriers” as a central factor behind the weaker outlook.
The World Bank also revised its global growth forecast down by 0.4 percentage points, now expecting the world economy to expand by only 2.3% in 2025 — a significant slowdown from 2.8% last year.
Chief economist Indermit Gill wrote in the report’s foreword that the global economy had lost momentum and missed the opportunity for a “soft landing” from post-pandemic inflation. “The world economy today is once more running into turbulence,” he warned. “Without a swift course correction, the harm to living standards could be deep.”
The Chinese economy, long a key driver of global growth, is expected to decelerate from 5% in 2024 to 4.5% this year and 4% in 2026, weighed down by U.S. tariffs, a real estate downturn, and demographic challenges.
The eurozone economy is also forecast to struggle, with growth slowing to 0.7%, down from 0.9% in 2024. The report points to rising uncertainty due to unpredictable tariff announcements, which are deterring business investment across Europe.
In contrast, India remains the fastest-growing major economy, although its expansion is set to moderate to 6.3% this year, down from 6.5% in 2024. Japan is expected to see marginal improvement, with growth picking up from 0.2% to 0.7%, though still short of previous forecasts.
The World Bank's findings follow a similar warning from the OECD, which also trimmed its global and U.S. economic outlook last week, citing trade-related uncertainty and geopolitical instability.
By RSS/APNews
