The World Bank has cut its global economic growth forecasts, warning that rising trade tensions and policy uncertainties are putting a damper on economies around the world.
In its latest Global Economic Prospects report released on Tuesday, the bank lowered its 2025 global growth forecast to 2.3% from the 2.7% predicted in January. The outlook for 2026 was also reduced to 2.4%, down from 2.7%.
According to the report, nearly 70% of economies across all regions and income levels are experiencing lower growth projections. Advanced economies are expected to expand by just 1.2% this year, a drop from the earlier forecast of 1.7%. Emerging markets and developing economies also saw their growth forecast lowered to 3.8%, down by 0.3 percentage points.
The United States is now expected to grow by 1.4% in 2025, which is 0.9 percentage points less than previously forecasted and only half of the 2.8% growth seen in 2024. The Euro Area and Japan are both predicted to grow by 0.7% this year, reflecting decreases from earlier estimates.
Interestingly, China’s growth forecasts for both 2025 and 2026 remain steady, indicating some resilience amidst global uncertainties.
“The world economy is once more running into turbulence while a ‘soft landing’ appeared to be in sight only six months ago,” the report stated. “Without a swift course correction, the harm to living standards could be deep.”
Indermit Gill, the World Bank Group’s chief economist and senior vice president for Development Economics, expressed concerns about the developing world. “Outside of Asia, the developing world is becoming a development-free zone,” he said. Gill highlighted that while debt levels are reaching record highs, economic and investment growth in developing economies is slowing.
The report emphasizes that progress by emerging market and developing economies in closing income gaps with advanced economies and reducing extreme poverty is anticipated to remain insufficient. Much depends on how global trade policies evolve.
Although a modest recovery is expected in 2026 and 2027, global output is projected to stay significantly below earlier projections. The report warns that growth could decline further if trade restrictions escalate or policy uncertainties persist, potentially leading to increased financial stress.
For young people in the Global South, these forecasts highlight the challenges ahead in terms of job opportunities, economic stability, and efforts to alleviate poverty. The World Bank’s message is clear: swift policy actions are needed to steer the global economy back on track.
