Revised Global Growth Outlook
The World Bank revised its global economic growth forecast downward, now expecting a 2.3% expansion in 2025, down from the previous estimate of 2.7%. This adjustment marks the slowest rate of global growth since 2008, aside from global recessions, according to the Bank’s Global Economic Prospects report.
Impact of Trade Uncertainty
Trade uncertainty has emerged as a primary factor affecting the global economic outlook. Indermit Gill, Senior Vice President and Chief Economist of The World Bank Group, noted that international trade discord has disrupted many policy certainties that had previously helped reduce extreme poverty and fostered global prosperity after World War II.
Revised Growth Projections for Key Regions
The World Bank has also downgraded the growth forecasts for major economies. The U.S. GDP forecast for 2025 was lowered by 0.9 percentage points to 1.4%. Similarly, the euro area’s GDP growth estimate was reduced by 0.3 percentage points to 0.7%.
Trade Disputes and Their Potential Impact
The Bank’s report emphasized that an escalation in trade tensions could result in even slower growth, while trade agreements could improve the outlook. If ongoing trade disputes are resolved with agreements that halve tariffs, global growth could rise by 0.2 percentage points on average through 2025 and 2026.
Global Trade Negotiations
Currently, the U.S. and its trading partners, including China and the European Union, are negotiating trade terms after U.S. President Donald Trump imposed tariffs on several countries in April. These discussions could have a significant effect on future global growth, with temporary reductions in tariffs potentially easing trade disruptions.
Global Growth Challenges
The World Bank’s outlook follows similar forecasts from other organizations, including the Organisation for Economic Co-operation and Development (OECD), which projected global growth to slow to 2.9% in 2025, down from a prior estimate of 3.1%. The OECD also cited trade-related uncertainties as a key factor in its revision.
