A worker welds metal at a steel tank plant in Mexico City on February 11, 2025. (AP Photo/Eduardo Verdugo, File)
World Bank Slashes Growth Forecast, Warns of Global Slowdown
The World Bank has warned that global economic growth is expected to slow down sharply this year, cutting its forecast to 2.3% for 2025. This significant downgrade reflects rising trade tensions and policy unpredictability, especially in major economies like the United States and China.
While the report does not directly name former U.S. President Donald Trump, it cites rising trade barriers and sudden tariff hikes as key reasons for the economic strain. Trump's trade decisions—especially his blanket 10% import tariffs—have sparked uncertainty and retaliation from trading partners, creating a ripple effect on businesses worldwide.
In the U.S., the World Bank now predicts the economy will grow by just 1.4% in 2025, half the pace it maintained in 2024. This is a notable reduction from the 2.3% growth it had previously projected for the year. According to the report, the U.S. has lost momentum due to costly imports and increased tension with global trading partners, which have discouraged businesses from making long-term investments.
China, the world’s second-largest economy, is also feeling the pressure. Its expected growth for 2025 stands at 4.5%, down from 5% last year, and projected to shrink further to 4% in 2026. Aside from the strain of U.S. tariffs, China is grappling with a struggling real estate market and an aging population, which could weaken its economic performance over the long term.
The Eurozone is not spared either. The 20 countries that use the euro are collectively forecasted to grow only 0.7% in 2025, compared to 0.9% in 2024. This decline stems from weakened exports and business hesitation, largely due to the unpredictability surrounding new tariffs and sudden trade restrictions.
India, though still leading in terms of growth, is also slowing down slightly. The World Bank expects India’s economy to grow at 6.3% in 2025, down from 6.5% last year and a January forecast of 6.7%. Japan’s economy is expected to improve modestly—from 0.2% in 2024 to 0.7% this year—though it remains far below earlier predictions.
In the foreword to the report, World Bank Chief Economist Indermit Gill expressed concern that the global economy has missed the chance for a “soft landing,” a phase where inflation slows without triggering major economic pain. Instead, Gill warns that we are entering a period of renewed economic turbulence, and unless nations take quick and thoughtful action, people’s living standards could take a serious hit.
The World Bank’s mission is to reduce poverty and raise living standards through financial support for developing countries. It now joins the Organization for Economic Cooperation and Development (OECD), which also recently downgraded its economic outlook, in signalling a need for urgent global policy recalibration.
