World Bank Cuts Global Economic Growth Forecast Amid Tariff-Fueled Uncertainty

The global economy could grow less this year than previously projected, the World Bank said Tuesday, citing uncertainty over tariffs and ongoing trade disputes.

In its semiannual report, the World Bank said the global economy faces headwinds from “increased trade tension and heightened policy uncertainty,” sparked by President Trump’s April 2 tariff announcement and the ensuing trade conflicts.

The global economy is now expected to grow by about 2.3% this year, down from the bank’s January projection of 2.7%. That would mark the slowest growth rate in a non-recession year since 2008, with a “tepid” recovery currently expected for 2026 and 2027.

Policy Certainties ‘Upended’ by Trade Discord

“International discord—about trade, in particular—has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II,” World Bank Chief Economist Indermit Gill wrote in the report released Tuesday.

The bank cut its projections for real GDP growth for the U.S. to 1.4% from 2.3% in its January projection, also trimming its growth expectations for the “Euro area” by 0.3 percentage point, and by 0.5 percentage point for Japan, while China’s growth forecast did not change.

Global economic growth could pick up if ongoing trade negotiations like the talks between the U.S. and China are resolved quickly, with tariff rates remaining near their current levels. However, the bank also said the outlook could worsen “if trade restrictions escalate or if policy uncertainty persists, which could also result in a build-up of financial stress.”