Citing trade wars, the World Bank sharply downgrades global economic
growth forecast to 2.3%
[June 11, 2025] By
PAUL WISEMAN
WASHINGTON (AP) — 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%) this year as it did
in 2024 (2.8%). That marked a downgrade from the 2.3% 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%
in 2025, down from 2.8% 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% 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 5% in 2024 to
4.5% this year and 4% 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.
[to top of second column] |
President Donald Trump speaks during an "Invest in America"
roundtable with business leaders at the White House, Monday, June 9,
2025, in Washington. (AP Photo/Evan Vucci)
 The World Bank expects the 20
European countries that share the euro currency to collectively grow
just 0.7% this year, down from an already lackluster 0.9% in 2024.
Trump’s tariffs are expected to hurt European exports. And the
unpredictable way he rolls them out — announcing them, suspending
them, coming up with new ones — has created uncertainty that
discourages business investment.
India is once again expected to the be world’s fastest-growing major
economy, expanding at a 6.3% clip this year. But that’s down from
6.5% in 2024 and from the 6.7% the bank had forecast for 2025 in
January. In Japan, economic growth is expected to accelerate this
year – but only from 0.2% in 2024 to a sluggish 0.7% this year, well
short of the 1.2% the World Bank had forecast in January.
The World Bank seeks to reduce poverty and boost living standards by
providing grants and low-rate loans to poor economies.
Another multinational organization that seeks to promote global
prosperity — the Organization for Economic Cooperation and
Development — last week downgraded its forecast for the U.S. and
global economies.
All contents © copyright 2025 Associated Press. All rights reserved
 |
