The world is headed for its slowest economic growth in more than half a century, with President Donald Trump’s aggressive trade war policies emerging as a key culprit, according to a new World Bank analysis.
The Washington-based institution’s latest report, released Tuesday, slashes its global GDP growth forecast for 2025 to just 2.3%, down from the 2.7% projected in January. The revised outlook assumes that worldwide tariffs will remain at their late-May levels, following Trump’s latest rounds of import duties on America’s trading partners.
Weakest Growth in Decades
If these projections hold, the first seven years of the 2020s will mark the weakest global growth of any decade since the 1960s—excluding the recessions in 2009 and 2020. The World Bank said only the financial crisis and the COVID-19 pandemic saw sharper economic contractions, with global output shrinking by 1.3% and 2.9% in those years, respectively.
“The sharp 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 World Bank report said. Nearly 70% of countries, across all regions and income groups, have seen their growth forecasts cut as a result.
Trade Tensions Trigger Global Downturn
Fitch Ratings also sounded the alarm, downgrading its outlook for global government bonds from “neutral” to “deteriorating,” specifically citing trade war uncertainty and the impact of Trump’s tariff hikes. “The escalation in the global trade war, uncertainty over the endpoint for tariffs and their impact on global trade volumes, supply chains, investment and international relations is a significant adverse global economic shock,” Fitch wrote in its report.
Trump’s trade policies since returning to office in January have included sharp increases in duties on key imports such as cars and steel. Unless new deals are struck, another wave of “reciprocal tariffs” will hit America’s trading partners from July 9, raising fears of further disruption despite ongoing negotiations.
Businesses, Consumers Feel the Pain
The combination of new tariffs, inconsistent implementation, and growing policy unpredictability is weighing heavily on business confidence and household budgets worldwide. Trade negotiations between the US and China continue in London, but businesses and global markets remain jittery as the threat of new tariffs looms.
Meanwhile, the World Bank highlights that many developing economies are also being squeezed by rising government debt, adding to the headwinds for growth.
Outlook: Cautious and Uncertain
With the world economy bracing for a prolonged period of sluggish expansion and heightened trade tensions, the ripple effects of tariff policies—and the uncertain global trade environment—are likely to remain front and center in the coming years.
Stay with Glide News for the latest on global economic trends and policy developments.
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