World Bank sharply cuts global growth outlook on trade turbulence

The World Bank sharply cut its global economic growth projections Tuesday, citing disruption from trade uncertainty in particular.

It now expects the global economy to expand by 2.3% in 2025, down from an earlier forecast of 2.7%.

“This would mark the slowest rate of global growth since 2008, aside from outright global recessions,” the Bank said in its Global Economic Prospects report.

Trade uncertainty, especially, has weighed on the outlook, the World Bank suggested.

“International discord — about trade, in particular — has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II,” Indermit Gill, senior vice president and chief economist of The World Bank Group, said in the report.

It also 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%.

The Bank noted that an escalation of trade tensions could push growth even lower, but the picture could improve if major economies strike lasting trade agreements.

“Our analysis suggests that if today's trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, 2025, global growth could be stronger by about 0.2 percentage point on average over the course of 2025 and 2026,” Gill said.

The U.S. and many of its trading partners are currently in negotiations after U.S. President Donald Trump imposed steep tariffs on numerous countries in April. This week, for example, the U.S. and China are meeting in London after the two countries agreed to temporarily reduce levies following talks in May.

Negotiations are also still ongoing between the U.S. and European Union with less than a month to go before previously announced tariffs are set to come into full force.

In cutting its global growth expectation, the World Bank follows various other bodies, including the Organisation for Economic Co-operation and Development, which also cited the fallout from trade and tariff-related uncertainty as the key factor.

The OECD said earlier this month that it was expecting global growth to slow to 2.9% in 2025, also caveating its forecast with the potential for future tariff developments. It had previously forecast global growth of 3.1% this year.