World Bank Lowers Global Growth Outlook to 2.3% for 2025
The World Bank has revised its global economic growth forecast downward, projecting a growth rate of 2.3% for 2025, a significant drop from the earlier estimate of 2.7%. This adjustment reflects mounting concerns over escalating trade tensions and disruptions triggered by recent tariff policies.
Trade Barriers Disrupt Global Economic Momentum
Although some tariffs have been temporarily paused, persistent trade disputes — particularly between the United States and China — continue to unsettle global markets. These tensions have hindered supply chains and dampened trade activity worldwide. While the World Bank's report refrains from explicitly naming any government or leader, it attributes the slowdown to a “substantial rise in trade barriers.”
Indermit Gill, the World Bank's Chief Economist, warned that without swift policy adjustments, the consequences could be severe. “The world economy today is once more running into turbulence. Without a swift course correction, the harm to living standards could be deep,” Gill said.
Global Trade Growth Faces Sharp Decline
The outlook for global trade is equally grim. The World Bank forecasts trade growth to slow sharply to 1.8% in 2025, compared to 3.4% expected in 2024. To put this into perspective, annual trade growth averaged 5.9% during the 2000s, highlighting the scale of the slowdown.
India Emerges as Fastest-Growing Major Economy
Despite the global headwinds, India is projected to lead among major economies with a growth rate of 6.3% in 2025, positioning it as the fastest-growing major economy. However, this forecast is slightly lower than the 6.7% predicted earlier this year and down from the 6.5% growth India experienced last year.
Vulnerable Countries Face Long Road to Recovery
The report highlights that low-income countries are bearing the brunt of the economic slump. These nations are expected to see their per capita GDP fall approximately 6% below pre-pandemic levels, with recovery potentially stretching out over the next two decades. The lingering impact underscores persistent inequalities in the global economic recovery.
Growth Downturn in Established Economies
- United States: Growth forecast has been slashed from 2.3% to 1.4% for 2025, down significantly from 2.8% growth last year.
- European Union: Expected growth reduced from 1.0% to 0.7%.
- Japan: Growth forecast cut from 1.2% to 0.7%.
- China: Despite the turbulence, China’s growth projection remains steady at 4.5%.
Looking Ahead
This downward revision paints a challenging picture for the global economy amid ongoing geopolitical tensions and trade disputes. The World Bank’s warning signals that urgent policy measures are essential to navigate these headwinds and mitigate long-term damage to living standards worldwide.
