World Bank Slashes Global Growth Forecast Amid Tariff Uncertainty

The World Bank has reduced its global growth forecast for 2025 to 2.3%, attributing the decline to heightened tariffs and pervasive uncertainty. This revision came as part of the lender's latest Global Economic Prospects report, which noted that nearly 70% of economies, including major players like the U.S., China, and Europe, witnessed downgraded projections. The revisions follow President Trump's erratic tariff adjustments that have heightened the U.S. tariff rate to its highest in nearly a century.

The report warns of a potential global trade slowdown, predicting trade growth to dip to 1.8% in 2025. Economic risks are primarily tilted downward due to trade barriers and a tumultuous global market. Nevertheless, World Bank officials remain hopeful about potential dialogue to ease the trade tensions, suggesting that a subsequent phase of growth may be driven by adaptations in supply chains and advancements in artificial intelligence.

Despite the World Bank's cautious outlook, the White House cited recent economic data pointing to stronger economic performance, including increases in investment and personal income. Emerging markets, however, are expected to struggle more, with developing economies likely to face significant long-term recovery challenges. The World Bank's outlook highlights the urgent need for new trade partnerships amid shifting global dynamics.

(With inputs from agencies.)