In a new assessment of the global economy, the World Bank on Tuesday revised its growth expectations for 2025, decreasing them by 0.4 percentage points to a modest 2.3%. This adjustment reflects significant challenges posed by escalating tariffs and pervasive uncertainty impacting virtually all countries.
The updated figures are part of the World Bank’s semi-annual Global Economic Prospects report, which now foresees diminished growth for nearly 70% of the world’s economies compared to six months ago. This downturn encompasses regions such as the U.S., China, Europe, and six emerging market sectors.
The shift comes in the wake of the U.S. President Donald Trump’s tenure, which has brought tumult to global trade via a sequence of tariffs. These actions have pushed the effective U.S. tariff rate from below 3% to the mid-teens, the highest level in nearly a hundred years, prompting retaliatory measures from China and other nations.
The World Bank predicted that this year’s global economic growth will be the weakest, outside of a recession, since 2008. By 2027, worldwide GDP growth is projected to average a mere 2.5%, marking the slowest decade-long pace since the 1960s.
Global trade is expected to rise by only 1.8% in 2025, dropping from 3.4% in 2024 and starkly contrasting with its 5.9% level in the 2000s. These calculations consider tariffs effective as of late May, including a 10% U.S. levy on imports from most countries and exclude recent increases announced in April but postponed until July 9 for negotiation purposes.
According to the World Bank, inflation globally is anticipated to hit 2.9% in 2025, remaining elevated from pre-pandemic levels due to tariff hikes and restricted labor markets.
In the eurozone, growth expectations were trimmed by 0.3 percentage points to 0.7%, and Japan’s forecast was reduced by 0.5 percentage points to 0.7%. Meanwhile, growth in emerging markets and developing economies is predicted to reach 3.8% in 2025, down from a previous forecast of 4.1% set in January.
The report highlights that poorer nations will endure the harshest impacts. By 2027, developing economies’ per capita GDP is expected to be 6% below the levels recorded before the pandemic, and it may take these countries—excluding China—two decades to recover fully from the economic setbacks experienced over the 2020s.
Mexico, which relies heavily on trade with the U.S., faced a notable revision in its growth forecast, cut by 1.3 percentage points to just 0.2% in 2025. On the other hand, the World Bank maintained its forecast for China at 4.5%, citing the country’s remaining monetary and fiscal capabilities to bolster its economy and promote growth.
