World Bank lowers global growth forecast, citing trade war ‘turbulence’

Citing 'trade barriers,' the World Bank downgraded the global economic growth forecast to 2.3 per cent this year from 2.8 in 2024, with the U.S. expanding 1.4 per cent.

U.S. President Donald Trump’s trade wars are expected to slash economic growth this year in the United States and around the world, the World Bank forecast Tuesday.

Citing “a substantial rise in trade barriers’’ but without mentioning Trump by name, the 189-country lender predicted that the U.S. economy – the world’s largest – would grow half as fast (1.4 per cent) this year as it did in 2024 (2.8 per cent).

That marked a downgrade from the 2.3 per cent U.S. growth it had forecast back for 2025 back in January.

The bank also lopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3 per cent in 2025, down from 2.8 per cent in 2024.

In a forward to the latest version of the twice-yearly Global Economic Prospects report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the “soft landing’’ — slowing enough to tame inflation without generating serious pain — it appeared headed for just six months ago.

“The world economy today is once more running into turbulence,” Gill wrote. “Without a swift course correction, the harm to living standards could be deep.’’

America’s economic prospects have been clouded by Trump’s erratic and aggressive trade policies, including 10 per cent taxes — tariffs — on imports from almost every country in the world. These levies drive up costs in the U.S. and invite retaliation from other countries.

The Chinese economy is forecast to see growth slow from five per cent in 2024 to 4.5 per cent this year and four per cent next. The world’s second-largest economy has been hobbled by the tariffs that Trump has imposed on its exports, by the collapse of its real estate market and by an aging workforce.