World Bank Downgrades Economic Growth Forecast Amid Trade Wars

Strategic Insights -

Global economic growth is expected to slow in 2025, with the United States and European countries facing significant declines. The World Bank's latest forecast cites rising trade barriers, including tariffs imposed by President Donald Trump, as a major contributor to the slowdown. The report also warns that the global economy has missed its chance for a "soft landing" and may be heading for a prolonged period of turbulence.

Key Takeaways:

  • The World Bank predicts the US economy will grow 1.4% in 2025, down from 2.8% in 2024 and 2.3% forecast in January.
  • The global economy is expected to expand just 2.3% in 2025, down from 2.8% in 2024.
  • President Trump's tariffs are expected to drive up costs in the US and invite retaliation from other countries, particularly in the Chinese economy, which is forecast to slow from 5% in 2024 to 4.5% this year and 4% next.
  • European countries, which share the euro currency, are expected to collectively grow just 0.7% this year, down from 0.9% in 2024 and hurt by Trump's tariffs.
  • India is expected to be the world's fastest-growing major economy, expanding at a 6.3% clip this year, but down from 6.5% in 2024.
  • Japan's economic growth is expected to accelerate this year, but only from 0.2% in 2024 to a sluggish 0.7% this year, well short of the 1.2% the World Bank had forecast in January.

Statistics:

  • US economic growth forecast: 1.4% in 2025, down from 2.8% in 2024.
  • Global economy growth forecast: 2.3% in 2025, down from 2.8% in 2024.
  • Chinese economy growth forecast: 5% in 2024, 4.5% in 2025, and 4% in 2026.
  • European countries' collective economic growth forecast: 0.7% in 2025, down from 0.9% in 2024.
  • India's economic growth forecast: 6.3% in 2025, down from 6.5% in 2024.
  • Japan's economic growth forecast: 0.7% in 2025, down from 0.2% in 2024.

Sources:

  • "World Bank Downgrades Global Growth Forecast Amid Trade Tensions" by Paul Wiseman (The Associated Press, 2025)
  • "Global Economic Prospects" report by the World Bank (2025)
  • "OECD Downgrades US and Global Economic Growth Forecasts" (Organisation for Economic Cooperation and Development, 2025)