On June 11, 2025, the World Bank released a report forecasting that the 2020s could mark the weakest decade for global economic growth since the 1960s, citing trade tariffs—particularly those initiated by former President Trump—as a major factor. The expected global GDP growth in 2025 has been slashed to 2.3%, the lowest in 17 years outside of recessions. The report suggests remedies including reducing tariffs, tightening fiscal deficits, and focusing on employment initiatives.
The World Bank’s revised forecast represents a significant downgrade from its previous estimate of 2.7% growth for 2025. The institution attributes this slowdown primarily to escalating trade tensions and the proliferation of protectionist policies, particularly those emanating from the United States. The report underscores that nearly 70% of the world’s economies have experienced downward revisions in their growth projections, with the United States, China, and European nations among the most affected.
In the United States, the economy is projected to grow by a modest 1.4% in 2025, a sharp decline from the 2.8% growth recorded in the previous year. This deceleration is largely attributed to the imposition of widespread tariffs under President Trump’s administration, which have disrupted global trade flows and provoked retaliatory measures from key trading partners.
The World Bank’s Chief Economist, Indermit Gill, emphasized the detrimental impact of these trade barriers, stating that “global growth prospects have deteriorated.” He warned that without a swift course correction, the harm to living standards could be profound, particularly in developing economies where fiscal deficits have averaged nearly 6%.
Trade tensions have not only dampened economic growth but have also heightened market uncertainty, leading to reduced investment and consumer confidence. The World Bank notes that global trade growth is expected to slow to 1.8% in 2025, down from 3.4% in 2024, and significantly below the 5.9% average in the 2000s.
In response to these challenges, the World Bank recommends a multifaceted approach to reinvigorate global economic growth. Key policy prescriptions include the reduction of trade tariffs to restore global trade, the tightening of fiscal deficits—especially in developing nations—and a focus on employment initiatives to address swelling working-age populations in regions like South Asia and sub-Saharan Africa.
The report also highlights the potential for further economic deterioration if current trade policies persist or escalate. Should additional tariffs be implemented or existing ones intensified, global growth could fall to just 1.8% in 2025 and 2% in 2026, exacerbating the risk of a prolonged economic downturn.
Despite these grim projections, the World Bank maintains that the risk of a global recession remains low, estimated at under 10%. However, the institution cautions that the cumulative effect of trade tensions, policy uncertainty, and inflationary pressures could inflict lasting damage on the global economy if left unaddressed.
The World Bank’s findings align with recent assessments from other international organizations. The Organization for Economic Cooperation and Development (OECD) has also downgraded its economic forecasts, citing similar concerns over trade disruptions and geopolitical risks.
As the global economy navigates these turbulent waters, the World Bank’s report serves as a stark reminder of the interconnectedness of nations and the far-reaching consequences of protectionist policies. It underscores the urgent need for coordinated international efforts to dismantle trade barriers, stabilize fiscal policies, and foster inclusive economic growth.
