World Bank cuts global growth forecast as trade tensions heighten uncertainty

WASHINGTON - The World Bank on June 10 slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3 per cent, saying that higher tariffs and heightened uncertainty posed a significant headwind for nearly all economies.

In its twice-yearly Global Economic Prospects report, the global lender lowered its forecasts for nearly 70 per cent of all economies - including the US, China and Europe, as well as six emerging market regions - from the levels it projected six months ago before US President Donald Trump took office.

Mr Trump has upended global trade with a series of on-again, off-again tariff hikes that have increased the effective US tariff rate from below 3 per cent to the mid-teens - its highest level in almost a century - and triggered retaliation by China and other countries.

The World Bank is the latest body to cut its growth forecast as a result of Mr Trumps erratic trade policies, although US officials insist the negative consequences will be offset by a surge in investment and still-to-be approved tax cuts.

It stopped short of forecasting a recession, but said global economic growth this year would be the weakest outside of a recession since 2008. By 2027, global gross domestic product growth was expected to average just 2.5 per cent, the slowest pace of any decade since the 1960s.

The report forecast that global trade would grow by 1.8 per cent in 2025, down from 3.4 per cent in 2024 and roughly a third of its 5.9 per cent level in the 2000s. The forecast is based on tariffs in effect as of late May, including a 10 per cent US tariff on imports from most countries. It excludes increases that were announced by Trump in April and then postponed until July