WASHINGTON (Realist English). The World Bank has significantly downgraded its global economic growth forecast for 2025, warning that persistent trade disputes and geopolitical uncertainty are dragging on investment and cross-border commerce. In its latest Global Economic Prospects report, published Tuesday, the Bank cut its global GDP growth projection to 2.3%, down from an earlier estimate of 2.7%.
“This would mark the slowest pace of global growth in nearly two decades, outside of outright recessions,” the report stated.
At the heart of the downgrade is what the Bank calls “deepening international discord” over trade, which it argues has undermined the policy foundations that supported postwar economic development.
“Trade tensions are no longer just short-term headwinds — they are eroding the very assumptions that underpinned decades of progress in poverty reduction and global prosperity,” said Indermit Gill, the Bank’s Chief Economist and Senior Vice President. “Unless major economies move decisively to rebuild cooperation, we risk a prolonged period of economic underperformance.”
Among the specific regional revisions:
- U.S. growth for 2025 is now forecast at 1.4%, down 0.9 percentage points from the Bank’s January outlook.
- The Eurozone is projected to expand by just 0.7%, a 0.3 percentage point downgrade.
The Bank emphasized that ongoing trade disputes — particularly between the United States and key partners such as China and the European Union — have unsettled global supply chains and clouded business sentiment.
The revised forecast comes as the U.S. administration under President Donald Trump continues to pursue aggressive tariff policies. Since April, the U.S. has imposed new duties on a range of imports, prompting retaliation and sparking negotiations on multiple fronts. Talks with China resumed this week in London, following a tentative agreement in May to partially roll back tariffs. Simultaneously, discussions with the European Union remain unresolved, with a deadline looming before additional duties take effect next month.
According to the World Bank, a meaningful breakthrough could still brighten the outlook. “If today’s disputes were resolved with agreements that halve tariffs compared to their May 2025 levels, global GDP growth could rise by an additional 0.2 percentage points in both 2025 and 2026,” said Gill.
The World Bank’s revision follows similar moves by other institutions. Earlier this month, the OECD also cut its global growth forecast for 2025 to 2.9%, citing trade-related uncertainty as a principal concern. That figure is down from a previous 3.1% projection.
The World Bank’s warning reflects not just a reaction to tariffs, but a deeper concern about systemic fragmentation in the global economy. With investment decisions increasingly shaped by political considerations rather than market logic, even short-term agreements may not fully restore confidence. The coming months will be pivotal — not only for negotiations, but for the credibility of the global rules-based trading order itself.
