In its latest report, the World Bank has warned of a significant slowdown in the global economy in 2025, projecting that the U.S. economy the world’s largest will grow by only 1.4%, just half the rate achieved in 2024 (2.8%). This forecast marks a clear downgrade from the 2.3% predicted in January and suggests that the global economy is on a more turbulent path than previously anticipated.
The international institution attributed the slowdown to what it described as a “substantial rise in trade barriers,” a clear reference to policies enacted by U.S. President Donald Trump, though he was not directly named in the report. The Trump administration has imposed 10% tariffs on imports from most countries worldwide, leading to increased living costs in the U.S. and prompting retaliatory measures from other nations, ultimately harming global trade and amplifying uncertainty.
These policies have had a widespread effect, with global growth now projected to fall to just 2.3% in 2025, down from 2.8% in 2024. The report notes that the world has missed its chance for a “soft landing” slowing inflation without triggering major economic pain. World Bank Chief Economist Indermit Gill warned that continuing on this course without a swift correction could lead to a serious decline in living standards globally.
China, the world’s second-largest economy, is also expected to slow, with growth forecast to drop from 5% in 2024 to 4.5% this year, and to 4% in 2026. This deceleration is attributed to the impact of U.S. tariffs, a collapsing real estate market, and demographic challenges due to an aging population.
Europe isn’t faring much better. The eurozone countries are expected to grow by just 0.7% in 2025, following a weak 0.9% in 2024. U.S. tariffs along with the unpredictable way they are implemented have created economic uncertainty and led to a decline in European investment.
Despite the global slowdown, India remains a relative bright spot, with expected growth of 6.3%. However, this too is lower than the previous forecast of 6.7%. In Japan, growth is projected to reach 0.7%, a slight improvement from 0.2% the previous year but still below earlier expectations.
Overall, the report reflects mounting international concern about the effects of protectionist trade policies, especially those pursued by the United States. International institutions such as the World Bank and the Organization for Economic Cooperation and Development (OECD) emphasize that unless these policies are adjusted, the global economy could face a prolonged period of stagnation and volatility.
