The World Bank has downgraded its 2025 global economic growth forecast, citing rising trade tensions and increasing global economic uncertainty fueled by U.S. President Donald Trump’s protectionist policies.
In its latest Global Economic Prospects report released on Tuesday, the World Bank cut its global GDP growth projection from 2.7% (January estimate) to 2.3%, marking one of the weakest global growth performances in nearly two decades, excluding periods of outright global recessions.
What’s Behind the Slump?
According to Indermit Gill, the World Bank’s Chief Economist, the slowdown is being driven by:
- High levels of policy uncertainty
- Escalating trade disputes
- Fragmentation in global trade relations
“That’s the weakest performance in 17 years, outside of outright global recessions,” Gill emphasized.
The World Bank also forecasts that global GDP growth in the 2020s will average just 2.5%, the slowest for any decade since the 1960s.
Trump’s Trade War Blamed
The downturn comes after President Trump re-imposed 10% tariffs on nearly all U.S. trading partners in April 2025, sparking backlash and retaliatory measures. Although the U.S. temporarily suspended the tariffs until early July, global markets reacted nervously.
Impact on Global Markets
Though currently paused, the ongoing U.S.-China tit-for-tat trade war has shaken markets. This has also impacted:
- Global supply chains
- Investor confidence
- Commodity prices
- As of Wednesday morning, oil prices had slipped:
- Brent Crude: $66.81 per barrel
- WTI Crude: $64.98 per barrel
- Outlook Going Forward
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The World Bank warns that unless countries de-escalate trade conflicts and foster a more collaborative global economic environment, the coming years could be marked by:
- Weak economic expansion
- Rising inflation pressures
- Slowed development in emerging economies
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