The World Bank has delivered a stark warning that the global economy is heading into its slowest growth period since the 1960s, largely driven by the fallout from trade policies introduced under former US President Donald Trump.

Nearly two-thirds of countries worldwide have seen their growth forecasts slashed compared to just six months ago, as escalating Tariffs and trade disputes take their toll.

In its latest biannual report, the bank now predicts global economic growth will slow to 2.3% in 2025, a 0.4% downgrade from forecasts made earlier this year, and expects a modest uptick to 2.6% by 2027.

Major economies, including Japan, Europe, and the United States, have all had their growth projections downgraded.

The January forecasts, made before Trump took office, did not anticipate the impact of his administration’s sweeping trade actions.

The introduction of a universal 10% tariff on US imports, along with higher tariffs on steel and aluminum, triggered sharp declines in financial markets in early April.

Although a trade ruling declared most of these tariffs illegal in May, an appeal allowed them to remain in place for now.

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The World Bank attributes the lowered US growth outlook to mounting trade tensions that have shaken investor confidence and dampened consumer spending.

Interestingly, the bank did not reduce China’s growth forecast, citing the country’s financial stability and resilience in the face of global political uncertainty.

“Against the backdrop of heightened policy uncertainty and increased trade barriers, the global economic context has become more challenging,” the report states, warning of more “sentiment-sapping policy uncertainty” as countries potentially implement further restrictive trade measures.

The bank cautions that any escalation in US tariffs could deepen the slowdown, warning of rising inflation and the risk of global trade grinding to a halt later this year.

Such a scenario could unleash a collapse in confidence, widespread uncertainty, and turmoil in financial markets.

However, the World Bank stops short of predicting a global recession, placing the odds at less than 10%.

This bleak outlook follows a similar downgrade by the OECD, which recently cut its global growth forecast to a “modest” 2.9%, down from 3.1%.

Meanwhile, efforts to resolve the ongoing US-China trade dispute continue, with a new round of talks held recently in central London.

The world now watches closely as these trade tensions play out, with the potential to shape economic prospects for years to come.

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