The World Bank has significantly revised its global economic growth forecasts, attributing the adjustments to ongoing trade uncertainties. In its latest assessment, the institution projects the global economy will grow by 2.3% in 2025, a decrease from its previous estimate of 2.7%.
The report indicates that this projected growth rate marks the slowest level of expansion since 2008, apart from periods of outright recession. The World Bank specifically highlights trade uncertainty as a major factor contributing to this pessimistic outlook.
Indermit Gill, senior vice president and chief economist at the World Bank Group, noted, “International discord — about trade, in particular — has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II.”
The World Bank has also lowered its growth prediction for the United States in 2025, adjusting it down by 0.9 percentage points to 1.4%. Additionally, it has revised its forecasts for the euro area, resulting in a reduction of 0.3 percentage points to 0.7%.
According to the Bank, escalating trade tensions could further diminish growth prospects, although there is potential for improvement if significant trade agreements are reached among major economies.
“Our analysis suggests that if today’s trade disputes were resolved with agreements that halve tariffs compared to their levels in late May 2025, global growth could be enhanced by approximately 0.2 percentage points on average throughout 2025 and 2026,” Gill added.
Currently, the United States and its trading partners are engaged in negotiations following the imposition of substantial tariffs by U.S. President Donald Trump in April. Notably, a meeting this week in London between the U.S. and China comes on the heels of a temporary reduction in tariffs that resulted from discussions in May.
Furthermore, talks are still progressing between the U.S. and the European Union, with a deadline approaching for the implementation of previously announced tariffs.
The World Bank’s downward revision of global growth expectations aligns with the views of other organizations, including the Organisation for Economic Co-operation and Development (OECD). The OECD recently acknowledged the impact of trade and tariff uncertainties as critical to its findings.
Earlier this month, the OECD projected a slowdown in global growth to 2.9% in 2025, also noting that future tariff developments could influence this forecast. This was a revision from its earlier prediction of 3.1% growth for the year.
