The World Bank reduced its 2025 global economic growth projection because rising tariffs together with increasing economic uncertainty create major barriers for worldwide economic growth. The bank reduced its 2025 growth prediction by 0.4 percentage points to 2.3% which represents the weakest growth rate outside of a recession since 2008.
The downward revision impacts 70% of countries including the U.S., China and Europe because of President Trump’s unpredictable tariff policies which have disrupted global trade. The current tariff levels have reached their highest point since the 1920s because U.S. effective tariff rates have increased from under 3% to reach the mid-teens which led trading partners to retaliate.
The bank predicts additional tariff increases will reduce 2025 growth by 0.5 percentage points. The World Bank projects global trade will expand at a minimal 1.8% rate during the upcoming year after reaching 5.9% during the 2000s economic expansion.
The report indicates that risks continue to point downward while forecasting inflation to exceed pre-pandemic levels at 2.9% during the following year. The World Bank avoided recession predictions but acknowledged that the global economy faces major instability.
The World Bank’s negative forecast demonstrates how trade uncertainty creates obstacles for investment while putting the world’s slow economic growth at risk.
