World Bank: 2025 Growth Forecast Cut to 2.3% | Trade Tariffs
The World Bank’s latest report delivers a stark warning: global growth for 2025 has been slashed to a mere 2.3% due to escalating trade uncertainty. This marks a important downward revision from the previous 2.7% forecast, signaling the slowest economic expansion since 2008, excluding recessions; and the U.S. isn’t immune, with its growth forecast also trimmed considerably. Trade tariffs and related disputes are the central cause of these downgrades. News Directory 3 covers the developing story. Could resolving these trade disputes provide a much-needed boost? Discover what’s next for the global economy.
World Bank slashes Global growth Forecast Amid Trade Uncertainty
Updated June 10, 2025
The world Bank has significantly lowered its global economic growth forecast, attributing the change primarily to trade uncertainty. The institution now projects a 2.3% expansion for the global economy in 2025, a decrease from its previous estimate of 2.7%.
According to the World Bank’s Global Economic Prospects report, this revised figure represents the slowest rate of global growth since 2008, excluding periods of outright recession.The report emphasizes that trade uncertainty has particularly impacted the economic outlook.
Indermit Gill, senior vice president and chief economist of the World Bank Group, stated that international discord, especially concerning trade, has disrupted policy certainties that previously contributed to poverty reduction and prosperity growth after World War II.
The World Bank also reduced its 2025 growth forecast for the U.S. by 0.9 percentage points, bringing it down to 1.4%. Similarly, GDP expectations for the euro area were lowered by 0.3 percentage points to 0.7%.These revisions reflect concerns about the impact of trade tensions on major economies.
The bank cautioned that further escalation of trade tensions could drive growth even lower. However, it also noted that the situation could improve if major economies reach lasting trade agreements. Resolving current trade disputes with agreements that halve tariffs could possibly boost global growth by approximately 0.2 percentage points on average over 2025 and 2026, according to the World Bank’s analysis.
The U.S. is currently engaged in trade negotiations with several partners after imposing tariffs in April. Recent talks led to a temporary reduction in levies between the U.S. and China. Negotiations between the U.S. and the European Union are also ongoing, with a deadline approaching for previously announced tariffs to take effect.
The Organization for Economic Co-operation and Development (OECD) has also cited trade and tariff-related uncertainty as a key factor in its decision to lower global growth expectations. Earlier this month,the OECD projected global growth to slow to 2.9% in 2025, a decrease from its previous forecast of 3.1%.
What’s next
The World Bank will continue to monitor trade negotiations and their impact on global economic growth, adjusting its forecasts as needed. The focus remains on the potential for trade agreements to mitigate the negative effects of trade uncertainty and support a stronger global economy.