World Bank Lowers Global Growth Forecast Amid Trade Tensions

On June 10, 2025, the World Bank released its latest Global Economic Prospects report, announcing a significant downward revision of its global economic growth forecast for the year. The institution now projects a growth rate of 2.3% for 2025, a decrease from the previously estimated 2.7%. This adjustment is primarily attributed to intensified trade tensions and rising tariffs, particularly those implemented by the United States under President Donald Trump's administration.

The report highlights that nearly 70% of countries, including major economies such as the United States, China, and European nations, have seen their growth projections reduced. The United States is now expected to grow at a rate of 1.4% in 2025, a significant decline from the 2.8% growth recorded in 2024. The eurozone's growth forecast has been lowered to 0.7%, down from 0.9% in 2024. China's growth outlook remains steady at 4.5%, supported by available policy tools. India continues to be the fastest-growing major economy, with a projected growth rate of 6.3%, though this is slightly below previous projections.

World Bank Chief Economist Indermit Gill expressed concern over the current economic trajectory, stating, "The world economy today is once more running into turbulence. Without a swift course correction, the harm to living standards could be deep." The report emphasizes that the increase in tariffs and the ensuing uncertainty are contributing to a broad-based growth slowdown and deteriorating prospects in most of the world's economies.

The report also notes that global trade growth is projected to slow to 1.8% in 2025, down from 3.4% in 2024. Global inflation is expected to reach 2.9% in 2025, remaining above pre-COVID levels, given tariff increases and tight labor markets. The World Bank warns that the drop in foreign direct investment (FDI) is threatening infrastructure development, poverty alleviation, and climate change efforts. Deputy Chief Economist Ayhan Kose emphasized the urgency of reversing this trend through bold domestic reforms, improved business climates, and global cooperation.

The World Bank's revised forecast underscores the significant impact of escalating trade tensions and protectionist policies on the global economy. The disproportionate effect on emerging markets and developing economies highlights the need for coordinated international policy responses to mitigate these challenges and support global economic stability.