The World Bank on Tuesday significantly downgraded its outlook for the global and U.S. economies for the current year, citing mounting trade barriers largely attributed to President Donald Trump’s administration.
The international financial institution warned that the world has missed its opportunity for a “soft landing” and is now facing renewed economic turbulence.
In its latest biannual Global Economic Prospects report, the World Bank projected that the U.S. economy will expand by just 1.4% this year, a sharp decline from the 2.8% growth seen in 2024. This new forecast is a substantial revision from the 2.3% growth it had predicted for the U.S. in January.
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Globally, the picture is also gloomier. The World Bank now anticipates the world economy to grow by only 2.3% in 2025, down from 2.8% last year and a 0.4 percentage point cut from its January forecast.
“The world economy today is once more running into turbulence,” wrote World Bank chief economist Indermit Gill in the report’s forward. “Without a swift course correction, the harm to living standards could be deep.”
While not mentioning President Trump by name, the report points to “a substantial rise in trade barriers” as a primary driver of the slowdown. The Trump administration’s implementation of broad-based tariffs, including a 10% tax on imports from nearly all countries, has increased costs for American businesses and consumers and triggered retaliatory measures from trading partners. The resulting uncertainty has also discouraged business investment, further dampening economic prospects.
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The economic fallout is not confined to the United States. The World Bank expects China’s growth to slow to 4.5% this year from 5% in 2024, hampered by U.S. tariffs, a struggling real estate market, and a shrinking workforce.
Europe is also feeling the impact, with the 20-nation Eurozone expected to see collective growth of a mere 0.7%, down from an already weak 0.9% in 2024. The report suggests that European exports will be hurt by Trump’s tariffs and that the erratic nature of their implementation has created a climate of uncertainty.
Even the world’s fastest-growing major economy, India, is not immune. Its growth forecast was trimmed to 6.3% from a previously expected 6.7%. Japan is projected to see a modest acceleration in growth to 0.7%, but this is well below the 1.2% January forecast.
This pessimistic outlook from the World Bank follows a similar downgrade last week by the Organization for Economic Cooperation and Development (OECD), which also revised its forecasts for the U.S. and a global economies downward. The World Bank, an organization dedicated to reducing poverty and improving living standards through grants and low-interest loans to developing nations, has sounded a clear alarm about the economic consequences of the ongoing trade disputes.
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