The World Bank has reduced its global economic growth forecast for 2025 by 0.4%, bringing it down to 2.3%. This adjustment reflects concerns over rising tariffs and increased uncertainty, which are seen as significant obstacles for nearly all economies. In its semi-annual Global Economic Prospects report, the World Bank cut growth projections for nearly 70% of economies worldwide, including the United States, China, and Europe, along with six emerging markets. The report highlights that recent tariff hikes have raised the effective U.S. tariff rate to mid-20%, the highest in nearly a century, triggering retaliatory measures from China and other nations. Despite these challenges, the World Bank does not anticipate a global recession but notes that 2025’s growth will be the weakest outside of recession periods since 2008. By 2027, global GDP growth is expected to average just 2.5%, the slowest pace for any decade since the 1960s. The report also predicts global trade growth at 1.8% for 2025, down from 3.4% in 2024. Inflation is projected to reach 2.9% in 2025, remaining above pre-pandemic levels due to tariff increases and tight labor markets. The World Bank warns that risks to global growth remain tilted to the downside, with further tariff escalations potentially reducing growth forecasts by an additional 0.5%.
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