World Bank Slashes 2025 Growth Forecasts as Trump-Era Tariffs Deepen Global Economic Slowdown

The World Bank has projected a significant slowdown in both the U.S. and global economies due to a sharp increase in trade barriers, largely driven by former President Donald Trump’s aggressive trade policies. Although the Bank refrained from naming Trump directly, its report pointed to widespread tariffs as a primary factor in slashing growth prospects. The U.S. economy is expected to grow by only 1.4% in 2025, a steep drop from 2.8% in 2024 and even below the earlier 2025 forecast of 2.3%. Global growth has also been revised down to 2.3%, from the previous year’s 2.8%.

Global Economy Misses Soft Landing Amid Tariffs, Inflation, and Mounting Economic Uncertainty

World Bank Chief Economist Indermit Gill noted in the Global Economic Prospects report that the global economy has veered off the course of a “soft landing” — a controlled slowdown aimed at reducing inflation without causing severe economic disruption. Gill emphasized that without prompt and strategic corrections, the world could face significant declines in living standards. The tone of the report was one of urgency, suggesting that economic turbulence is not only present but escalating.

The U.S. economy has been particularly impacted by Trump-era tariffs, which imposed 10% levies on imports from nearly all global trading partners. These tariffs have not only inflated costs domestically but also triggered retaliatory measures abroad. China, the second-largest economy, is forecast to experience a growth slowdown from 5% in 2024 to 4.5% in 2025, and further to 4% in the following year. China’s economic struggles are compounded by a collapsing real estate sector and demographic challenges.

Mixed Global Prospects as Europe Stalls, Japan Lags, and India Maintains Growth Momentum

Europe has also seen its economic outlook dim, with the eurozone expected to grow by just 0.7% in 2025, down from 0.9% the previous year. Trump’s erratic implementation of tariffs has introduced a layer of uncertainty that has discouraged European business investment and reduced export performance. Japan, while expecting a slight improvement in growth to 0.7%, still falls short of previous forecasts, indicating broader global instability tied to unpredictable U.S. trade actions.

Among major economies, India remains the fastest-growing, although its projected growth of 6.3% in 2025 is slightly lower than in previous years. Despite global headwinds, India’s relatively robust expansion stands out, though it too reflects a downgrade from January’s expectations.

The World Bank continues to play a vital role in supporting developing nations through financial assistance, aiming to mitigate some of the adverse effects of global economic turbulence. Similarly, the OECD has also issued downgraded economic forecasts, signaling widespread concern about the sustainability of global growth.