World Bank cuts global economic growth forecast due to increased trade tension

The World Bank on Tuesday slashed its economic growth estimates for 2025 by 0.4 percentage points to 2.3%, citing “a substantial rise in trade barriers.”

The revised figure would mark the slowest growth rate since 2008.

“Global growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment,” the bank said in its Global Economic Prospects report.

The bank said that the increase in tariffs and the ensuing uncertainty are contributing to a broad-based growth slowdown and deteriorating prospects in most of the world’s economies.

The US economy’s growth forecast, which was 2.3% in the World Bank’s January report, was cut to 1.4% for 2025.

Meanwhile, the eurozone’s growth estimate was also lowered 0.3 percentage points to 0.7% for 2025, to 0.8% for next year, and to 1% for 2027.

On the other hand, the estimates for Chinese economic growth were kept stable at 4.5% for this year and 4% for 2026.

The bank estimated the Turkish economy will grow 3.1% in 2025, 0.5 percentage points higher than its previous forecast, while Turkey’s gross domestic product (GDP) is expected to expand by 3.6% next year and 4.2% in 2027.

Indermit Gill, senior vice president and chief economist at The World Bank Group, said that the chance of a “soft landing” in the global economy has passed as the world economy today is once more running into turbulence.

“International discord – about trade, in particular – has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II,” Gill said.

“The global economy today is at an inflection point. The forces that once drove economic convergence and lifted billions out of poverty are now in retreat,” he added.

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