The global economy is on track to record its slowest year of growth outside a formal recession since the 2008 financial crisis, the World Bank has warned in a sobering new assessment. The report highlights widespread economic downgrades, sluggish performance in major economies, and a bleak outlook for the remainder of the decade.
According to The Times UK, which first reported the findings from the World Bank’s latest Global Economic Prospects report, global growth is now expected to reach just 2.3% in 2025 — a sharp reduction of 0.5 percentage points from previous projections. The downgrade is largely attributed to policy uncertainty surrounding tariffs introduced during former U.S. President Donald Trump’s administration.
The World Bank cautioned that, if current trends continue, the average growth rate of 2.5% projected for this decade would make the 2020s the slowest-growing period for the global economy since the 1960s.
“Global economic momentum has failed to rebound meaningfully following the shocks of the pandemic and the energy crisis,” the Bank stated, pointing to the destabilizing effect of recent U.S. trade policy. It said the uncertainty surrounding American tariffs had undermined prospects for a “soft landing” — a gradual economic stabilization — following recent global upheavals.
In a notable divergence, the World Bank’s outlook is more pessimistic than that of the Organisation for Economic Co-operation and Development (OECD), which last week projected global growth at 2.9% for both 2025 and 2026. Still, both institutions agree that a full-scale recession is unlikely this year.
However, the World Bank was particularly bearish on U.S. prospects. Growth in the U.S. is expected to decline sharply to 1.4% in 2025, down from 2.8% in 2024 — a nearly one-point drop from previous estimates. The report also slashed forecasts for nearly three-quarters of the world’s economies, with Thailand, South Africa, and the U.S. among the most severely downgraded.
In the eurozone, growth is now expected to slow to just 0.7%, down from 1% forecasted in January. China, the world’s second-largest economy, is forecast to fall short of its 5% GDP target, with growth projected at 4.5% this year and falling further to 4% in 2026 and 3.9% by 2027.
“Outside of Asia, the developing world is becoming a development-free zone,” said Indermit Gill, the World Bank’s chief economist. He noted a disturbing long-term decline in growth across low- and middle-income nations — from an average of 6% in the 2000s to less than 4% in the 2020s.
The report also highlighted political pressure on the World Bank and International Monetary Fund (IMF), particularly from the United States. The Trump administration had previously accused both Bretton Woods institutions of “mission creep” and demanded major reforms, including a push to lift restrictions on funding for nuclear energy projects — a demand the Bank has since agreed to consider.
Looking ahead, the World Bank called on all countries — including low-income nations — to reduce trade barriers. “The evidence is clear: economic co-operation is better than any of the alternatives for all parties,” the report concluded.
The Bank’s analysis suggests that resolving current trade disputes — including halving tariffs from their May 2025 levels — could boost global GDP by an average of 0.2 percentage points in both 2025 and 2026.
With global economic stability hanging in the balance, the World Bank’s warning serves as a stark reminder of the mounting risks to long-term growth, particularly as political and protectionist pressures continue to reshape global trade dynamics.
