World Bank Slashes Global Growth Forecast Amid Rising Fragilities

Strategic Insights -

The World Bank has significantly reduced its global economic growth forecast for 2025, warning of deepening vulnerabilities in the world economy. According to Ayhan Kose, deputy chief economist at the World Bank Group, policy uncertainty has reached its highest level ever, while geopolitical tensions are on the rise. This, combined with shaky short-term prospects for price stability, debt issues, and fiscal discipline, has led to a revision in the growth forecast from 2.7% to 2.3%. The World Bank stresses the need for long-term structural reforms to address the downward trend in growth over the past 25 years, which has dropped from 5% in the early 2000s to 3.5% today.

Key Takeaways:

  • The World Bank has reduced its global economic growth forecast for 2025 from 2.7% to 2.3%, citing deepening vulnerabilities and rising fragilities.
  • Policy uncertainty has reached its highest level ever, according to Ayhan Kose, deputy chief economist at the World Bank Group.
  • Geopolitical tensions are on the rise, with the US and China locked in intense competition.
  • Weakening investment and slower population growth are among the key structural problems driving the downward trend in growth.
  • The appetite for reform has significantly decreased in many countries, making it challenging to strengthen institutions and establish sound fiscal policies.
  • Rising tensions in the Middle East could exert renewed upward pressure on global energy prices, affecting inflation.
  • The World Bank calls for governments to implement serious and credible economic policies to sustain growth.

Statistics:

  • Global economic growth forecast for 2025: 2.3% (revised from 2.7%)
  • Policy uncertainty level: highest ever recorded
  • Average global growth rate in the early 2000s: 5%
  • Average global growth rate in 2020: 3.5%
  • Number of massive shocks faced by the global economy over the past five years: 6 (COVID-19 pandemic, severe supply chain disruptions, surging inflation, war in Ukraine, and instability in the Middle East)

Sources:

  • Ayhan Kose, deputy chief economist at the World Bank Group, in an interview with Anadolu.
  • World Bank Group.
  • "Global Economic Prospects 2025" report by the World Bank.