The World Bank has lowered its global growth forecast for 2025 to 2.3%, down 0.4 percentage points from its earlier estimate, citing high tariffs and uncertainty as key risks for most economies.
In its latest Global Economic Prospects report, the bank reduced growth projections for nearly 70% of economies, including the U.S., China, and Europe, as well as several emerging market regions. The global outlook has weakened mainly due to slower growth in advanced economies, which are now expected to expand by only 1.2% next year, compared to 1.7% in 2024.
U.S. growth is forecast at 1.4% in 2025, down 0.9 percentage points from January, with further reductions seen in 2026. The eurozone and Japan are each expected to grow by 0.7% next year. China’s forecast remains unchanged at 4.5%.
The report expects global trade to rise 1.8% in 2025, down from 3.4% in 2024. It also forecasts global inflation at 2.9% next year, above pre-pandemic levels, due to higher tariffs and tight labor markets.
Trade tensions, especially new U.S. tariffs and related retaliation, are likely to affect investment and consumption. A further increase in U.S. tariffs and responses from other countries could cut another 0.5 percentage point from global growth, according to the bank.
Despite the risks, the World Bank said the chance of a global recession is under 10%. Global GDP growth is expected to average just 2.5% by 2027, the slowest pace since the 1960s.
Growth in emerging markets is forecast at 3.8%, while Mexico’s outlook was cut sharply to 0.2%, reflecting its trade exposure to the U.S. Developing economies may take decades to recover from pandemic-related losses, the report said.
