Global economy slows: World Bank forecasts slowest growth since 2008

The World Bank has revised down its forecast for global gross domestic product growth for 2025 to 2.3%. This marks the slowest growth in the world economy outside of recession since the 2008 global financial crisis. The main factors behind this slowdown were escalating trade disputes, rising tariffs and general economic uncertainty.

According to Reuters, the World Bank’s new forecast predicts a 0.4 percentage point decline in global growth compared to previous estimates. The reasons are deepening trade barriers, in particular due to US policies, as well as a general slowdown in economic activity in developed and developing countries.

The reduction in forecasts affected almost 70% of the world’s economies, including key players — the US, China, the European Union and Japan. According to the report, global growth will average just 2.5% per year through 2027, the lowest five-year growth rate since the 1960s.

Trade tensions have already weighed on global trade. In 2025, global trade is expected to grow by just 1.8%, down significantly from 3.4% in 2024. In addition, a potential 10 percentage point increase in tariffs by the US and a possible response from other countries could further reduce global growth by another 0.5 percentage points.

Global inflation will remain elevated, averaging 2.9% in 2025. Experts point to several factors, including tariff pressures, rising logistics costs, and labor market restrictions. Despite this, the World Bank estimates that the probability of a global recession is currently no more than 10%.

The situation in low-income countries is particularly worrying. The report states that their GDP per capita will remain 6% below the level recorded before the COVID-19 pandemic by 2027. It could take another two decades for these countries to fully recover unless additional international efforts are made to financially support and modernize their economies.