World Bank Pours Cold Water on Global Growth Forecasts

The World Bank has downgraded its global GDP growth forecast for 2025 to 2.3 percent, a sharp decline from the 2.7 percent projection made in January. 

This marks the weakest economic performance in nearly two decades, excluding periods of outright recession. Driving the downgrade are escalating trade tensions, particularly the United States’ sweeping 10 percent tariffs imposed on most trading partners, which have pushed the effective US tariff rate from under 3 percent to the mid-teens, the highest level in nearly a century.

The slowdown is broad-based, with growth expectations lowered for nearly 70 percent of the world’s economies, including the US, China, and the Eurozone. Commodity-exporting countries in emerging markets face an added burden, as prices are expected to stay low through 2026. 

Around 60 percent of these economies now contend with both falling export revenues and volatile markets. By 2027, while high-income countries are expected to recover their pre-pandemic per capita GDP, developing nations, excluding China, may find themselves still 6 percent below that benchmark.

What Does This Mean for Me?

The World Bank projects average global growth of just 2.5 percent across the 2020s, potentially marking the slowest decade since the 1960s. 

Inflation expectations have also crept higher, further complicating policymaking. While the US and China have temporarily eased their trade standoff, a lasting resolution remains uncertain, and retaliatory tariffs continue to distort supply chains.