World Bank lowers global growth forecasts and 'turmoil' in trade wars – Country
The trade war between U.S. President Donald Trump is expected to cut global economic growth in the United States and around the world, the World Bank predicted Tuesday.
Lenders in 189 countries cited “a sharp rise in trade barriers” but did not mention Trump's name, predicting that the U.S. economy (the world's largest economy) will grow halfway (1.4%) (2.8%) this year as fast as it was in 2024 (1.4%).
This marks a downgrade of 2.3% growth in the U.S. from January to 2025.
The bank also lowered 0.4 percentage points from its forecast for global growth this year. Now, it expects the world economy to grow only 2.3% in 2025, down from 2.8% in 2024.
In the latest version of the latest version of the Global Economic Outlook Report, World Bank chief economist Indermit Gill wrote that the global economy missed the opportunity to “soft land” – enough to slow down enough to tame inflation without causing serious pain – it seemed only six months ago.
“The world economy is once again in turmoil,” Gill wrote. “The damage to living standards can be profound without rapid corrections.”
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Trump's instability and aggressive trade policies have shrouded the U.S. economic outlook, which includes 10% taxes (tariffs), which are imports from almost every country in the world. These levies prompted the United States to raise costs and invited revenge from other countries.
China's economy is expected to see growth from 5% in 2024 to 4.5% this year, while it will see growth of 4% in the next year. The tariffs imposed by Trump on exports, the collapse of real estate markets and the aging labor force have plagued the world's second-largest economy.
The World Bank expects the 20 European countries that share the euro currency to grow at just 0.7% this year, down from the already boring 0.9% in 2024.
Trump's tariffs are expected to damage European exports. The unpredictable ways he put them out – announcing them, pausing them, proposing new ways – caused uncertainty and hindering business investment.
India is expected to be the world's fastest growing major economy, with a clipping of 6.3% this year.
But that's down from 6.5% in 2024, with the bank forecasting 6.7% in January.
In Japan, economic growth is expected to accelerate this year – but only from 0.2% in 2024 to 0.7% this year, well below the 1.2% forecast by the World Bank in January.
The World Bank attempts to reduce poverty and improve living standards by providing grants and low-interest loans to poor economies.
Last week, another transnational organization aimed at promoting global prosperity – the Organization for Economic Cooperation and Development – lowered its forecasts for the U.S. and global economies.
& Copy 2025 Canadian Press
