Global Growth to Hit 2008-Low, Warns World Bank in Stark Forecast

Citing heightened trade tensions and policy uncertainty amidst wide-ranging tariffs by the Trump Administration, the World Bank today sharply cut its global economic growth projection to 2.3% in 2025 – nearly half a percentage point lower than anticipated at the start of he year.

According to the World Bank’s latest Global Economic Prospects report, the turmoil has resulted in growth forecasts being cut in nearly 70% of all economies—across all regions and income groups. A global recession is not expected.

Nevertheless, if its forecasts for the next two years materialize, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.

“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics.

“It has been advertising itself for more than a decade. Growth in developing economies has ratcheted down for three decades—from 6 percent annually in the 2000s to 5 percent in the 2010s—to less than 4 percent in the 2020s. That tracks the trajectory of growth in global trade, which has fallen from an average of 5 percent in the 2000s to about 4.5 percent in the 2010s—to less than 3 percent in the 2020s. Investment growth has also slowed, but debt has climbed to record levels.”

Growth is expected to slow in nearly 60 percent of all developing economies this year, averaging 3.8 percent in 2025 before edging up to an average of 3.9 percent over 2026 and 2027.

The World Bank cut its 2025 growth forecast for the U.S. by 0.9 percentage points to 1.4%, and reduced its euro area GDP expectations by 0.3 percentage points to 0.7%.

In East Asia and the Pacific region, growth is expected to slow to 4.5% in 2025 and to 4.0% in 2026–27. China’s economy is forecast to see growth slow from 5 per cent in 2024 to 4.5 per cent this year and 4 per cent in 2026.

In the Middle East and North Africa, growth is expected to rise to 2.7% in 2025 and further strengthen to an average of 3.9% in 2026–27

Global growth could rebound faster than expected if major economies are able to mitigate trade tensions—which would reduce overall policy uncertainty and financial volatility. The analysis finds that if today’s trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, global growth would be 0.2 percentage point stronger on average over the course of 2025 and 2026.

By: Maritime Magazine