World Bank revises downwards forecasts for 2025

The World Bank (WB) revised downwards its forecasts for global growth this year on Tuesday to 2.3%, warning that the 2020s could see the weakest growth in 60 years.

According to a report on global economic prospects published, global growth is expected to reach 2.3% this year, a drop of 0.4 percentage points (pp) compared to what the institution had anticipated at the beginning of the year.

This trend is in line with forecasts published in recent months by the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD), confirming the continued slowdown in the global economy.

Just six months ago, a soft landing seemed in sight (…). Now it looks like we are heading for a new turbulence. If we do not correct the trajectory, the consequences for living standards could be profound,” warned the WB’s chief economist, Indermit Gill, in an online press conference, quoted by AFP.

At issue are the effects of the increase in customs duties in the United States by Donald Trump and the resulting trade war between Washington and Beijing, with the consequent slowdown in world trade.

“Due to the high level of policy uncertainty and increasing trade fragmentation, our outlook for 2025 and 2026 has deteriorated,” Gill said.

Although the Bank rules out the risk of a recession this year, it believes that “if forecasts for the next two years come true”, the world economy will record its weakest average growth since the 1960s in the first seven years of the 2020s.

The slowdown is particularly concentrated in the main economies, especially the most advanced ones.

The outlook for the US economy has been revised down by almost a percentage point from January, now forecasting 1.4% this year, before a slight recovery to 1.6% in 2026.

Estimates for the eurozone economy were also revised downwards, by 0.3 percentage points compared to the previous report, with growth expected to be 0.7% this year and slightly better in 2026, at 0.8%.

The consequences are also very real for emerging and developing countries, which “with the exception of Asia, are currently zones of no development,” Gill said.

For these countries, average growth is expected to reach 3.8% this year, before rising slightly to 3.9% in 2026 and 2027, an average of one percentage point lower than that recorded during the 2010s, with inflation expected to remain at levels higher than those recorded before the Covid-19 pandemic.

The slowdown is sharp in major emerging countries, with Chinese growth now at 4.5% this year and slowing in the next two, while India is holding up better, at 6.3% in 2025.

The rest of the world could, however, recover if trade tensions between the world's major economies ease, which would have a positive effect by reducing the political uncertainty and financial volatility seen in recent months.

In particular, if “everyone works in good faith”, namely to “reduce tariff and non-tariff barriers with the United States”, stressed Indermit Gill.