The World Bank has delivered an especially grim update to its global economic outlook, sharply cutting its 2025 growth forecast to just 2.3%, citing mounting trade turbulence as the primary culprit. This marks the slowest pace of global expansion since 2008, excluding periods of outright recession. The downgrade reflects a broader trend of economic deceleration, with nearly 70% of the world’s economies—including the United States, the euro area, and major emerging markets—seeing their growth projections revised downward.

The U.S. growth forecast for 2025 was slashed by 0.9 percentage points to 1.4%, while the Euro area’s outlook was trimmed by 0.3 points to 0.7%, underscoring the widespread impact of trade uncertainty. Indermit Gill, the World Bank’s chief economist, noted that international discord, especially over trade, has eroded the policy stability that fueled global prosperity and poverty reduction since World War II. The report warns that further escalation in trade tensions could push growth even lower, but also suggests that lasting agreements to reduce tariffs could boost global growth by about 0.2 percentage points over the next two years.

These concerns are amplified by ongoing negotiations between the U.S. and its major trading partners, including China and the European Union, as steep tariffs imposed earlier this year continue to rattle markets and disrupt supply chains. The World Bank’s outlook echoes similar warnings from other international bodies, such as the OECD, which has also cited trade and tariff uncertainty as key risks to global growth. While a global recession is not currently expected, the persistent slowdown signals a challenging decade ahead, with the 2020s on track to be the weakest for economic growth since the 1960s.

End Notes

Source: https://www.cnbc.com/2025/06/10/world-bank-cuts-2025-growth-outlook-to-2point3percent-as-trade-tariffs-weigh.html?recirc=taboolainternal