Global economy to grow at slowest pace since 2008: World Bank

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The World Bank cut its global growth forecast for 2025 by 0.4 percentage points to 2.3%, citing pressures from higher tariffs and increased uncertainty; however, it ruled out the occurrence of a global recession.

In its twice-yearly Global Economic Prospects report released on Tuesday, the bank lowered its forecasts for 70% of the world's economies, from levels mentioned in its previous report just six months ago.

Global growth this year will be the weakest - excluding recessions - since 2008. By 2027, global GDP growth will average just 2.5%, the slowest pace of any decade since the 1960s, the bank said.

The World Bank expects global trade to grow by 1.8% in 2025, down from 3.4% in 2024, and about a third of its 5.9% level in the 2000s.

This expectation is based on tariffs in effect as of late May, including a 10% base tariff on US imports from most countries, and excludes the tariff increases announced by Washington in April, then postponed until July 9 to allow for negotiations.

Moreover, global inflation is expected to reach 2.9% in 2025, to remain above pre-COVID levels, due to tariff hikes and strong labor market activity, the report said.

The report also indicated that the escalation in trade barriers will "disrupt global trade in the second half of this year"; however, the risk of a global recession is less than 10%.

The World Bank said the global outlook has "deteriorated significantly" since January, with the growth rate of advanced economies falling to just 1.2%, down from 1.7% in 2024.

The World Bank cut its growth forecast for the US economy by 0.9 percentage points from its January forecast to 1.4%, and its expectation for 2026 by 0.4 percentage points to 1.6%.

It also cut its growth estimates for the eurozone by 0.3 percentage points to 0.7%, and for Japan by 0.5 percentage points to 0.7%.

Growth forecast for emerging markets was also slashed to 3.8% for 2025, down from 4.1% in the January report, while growth forecast for China was kept unchanged at 4.5%.