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The global economy will see the slowest decade for global growth since the 1960s as the effect of Donald Trump’s tariffs are felt, the World Bank has predicted.<\/p>\n
Nearly two thirds of countries in the world had their growth forecasts cut from the bank’s last set of predictions six months ago.<\/p>\n
The bank predicts global growth of only 2.3% in 2025, which is 0.4% lower than was forecast in January, and for 2027, it predicts growth of 2.6%<\/p>\n
Japan, Europe and the US were among those downgraded in the bank’s twice yearly report.<\/p>\n<\/div>\n
The bank’s last set of forecasts in January were made before Donald Trump took office.<\/p>\n
Since then, his introduction of a universal 10% tariff on all imports into the US, as well as higher tariffs on steel and aluminium, caused financial markets to plunge in early April.<\/p>\n
A trade ruling found the bulk of his global tariffs to be illegal in May, although the Trump administration won an appeal to keep them in place for now.<\/p>\n
The World Bank downgraded its growth forecast for the US in both 2025 and 2026, because of escalating trade tensions rattling investor confidence as well as private consumption.<\/p>\n
However, it did not downgrade the US’s main rival, China, which the bank said had enough financial stability to weather the “significant headwinds” from global political uncertainty.<\/p>\n
“Against the backdrop of heightened policy uncertainty and increased trade barriers, the global economic context has become more challenging,” the report said, adding that more “sentiment-sapping policy uncertainty” would come because of the potential for “further rapid shifts” in trade-restrictive moves by countries.<\/p>\n
The bank said there would be further cuts in growth if the US increased tariffs, and warned of rising inflation.<\/p>\n
Tariffs could lead to “global trade seizing up in the second half of this year, accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets,” the report said.<\/p>\n
However, it stopped short of predicting a global recession, saying the chances of that were less than 10%.<\/p>\n
The report comes after the OECD also downgraded<\/a> its outlook for the world economy. It said global growth is now expected to slow to a “modest” 2.9%, down from a previous forecast of 3.1%.<\/p>\n In the mean time, a new round of talks <\/a>aimed at resolving the trade war between the US and China has taken place in central London.<\/p>\n<\/div>\n