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Economic growth

Global Economic Growth Slows Down: World Bank Predicts Lowest Decade Since the 1960s

Strategic Insights

— 2 min read

The global economy is expected to experience the slowest growth in 2025 outside of a recession since 2008, according to the World Bank's Global Economic Prospects report. While the global output is predicted to increase by 2.3% in 2025, this is a reduction of 0.5 percentage points from the forecast at the start of the year, driven primarily by the advanced economies. The report warns of heightened policy uncertainty and increased trade barriers, leading to rising inflation and a potential decrease in growth. The OECD has also downgraded its global economic growth forecasts for 2025, citing the uncertain global economic context.

Key Takeaways:

  • The World Bank predicts that the global economy will experience the slowest growth in 2025 outside of a recession since 2008, with a growth rate of 2.3%.
  • The OECD has downgraded its global economic growth forecasts for 2025 from 3.1% to 2.9%.
  • The report attributes the downgrade to global growth this year to the advanced economies.
  • The growth projection is focused on Trump's latest tariff policies, which have negatively impacted global trade flows prompting rising business uncertainty.
  • The World Bank Deputy Chief Economist Ayhan Kose stated that uncertainty remains a powerful drag on investment and clouds the outlook.
  • The report warns that the potential for further trade restrictive moves will create more policy uncertainty and sentiment sapping.
  • The growth in the debt burden with the rise of interest rates since 2022 is increasing in significance.
  • The IMF projects that public debt will reach 100% of global GDP by the end of this decade.
  • The report notes that 54 countries spend more than 10% of their tax revenue on interest payments alone.
  • The World Bank warns that global trade would grow by 1.8% in 2025, down from 3.4% in 2024.
  • Global inflation is expected to reach 2.9% in 2025, remaining above pre-Covid levels.

Statistics:

  • 2.3% - the predicted growth rate of the global economy in 2025.
  • 0.5 percentage points - the reduction in the forecast at the start of the year.
  • 3.1% to 2.9% - the OECD's downward revision of global economic growth forecasts for 2025.
  • 2.3 billion people - live in countries that spend more on debt than on education.
  • 3.3 billion people - live in countries that spend more on debt service than on health.
  • 54 countries - spend more than 10% of their tax revenue on interest payments alone.
  • 22% - the percentage of total revenue budget in Bangladesh that will go towards interest payments in 2025-26.
  • 15.5% - the percentage of total spending in Bangladesh that will go towards interest payments in 2025-26.
  • 100% - the projected public debt as a percentage of global GDP by the end of this decade.
  • 1.8% - the predicted growth rate of global trade in 2025.
  • 2.9% - the expected global inflation rate in 2025.

Sources:

  • World Bank's Global Economic Prospects report (cited as "The WB report").
  • OECD's downward revision of global economic growth forecasts for 2025.
  • IMF's projection of public debt reaching 100% of global GDP by the end of this decade.
  • Joseph Stiglitz's article in the Financial Times.
  • UN data on interest payments as a share of tax revenue.
  • World Bank Deputy Chief Economist Ayhan Kose's statement on uncertainty.

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