The global economy is expected to grow at its slowest rate since 2008—excluding periods of global recession—due to increasing trade tensions and policy uncertainties, according to the World Bank’s June 2025 Global Economic Prospects report. The report highlights that growth projections have been downgraded for nearly 70% of countries, cutting across all income levels and regions. The World Bank now forecasts global growth to reach just 2.3% in 2025, a notable decrease from earlier expectations.
World Bank Chief Economist Indermit Gill noted a persistent downward trend in developing countries, warning that the global development narrative is weakening, especially outside of Asia. Growth in developing economies has declined from an average of 6% in the 2000s to below 4% in the 2020s. Simultaneously, global trade and investment growth have slowed, while public debt levels have reached record highs, compounding the challenge.
For 2025, nearly 60% of developing economies are projected to see further slowing, with average growth pegged at 3.8%. Low-income countries, often more vulnerable to global shocks, are also seeing their forecasts revised downward. Inflation remains elevated at a projected 2.9%, driven by rising tariffs and tight labour markets. These factors are making it harder for countries to reduce poverty, create jobs, and close income gaps with wealthier nations.
The World Bank cautions that without a strong and sustained economic recovery, many developing nations may take up to two decades to regain their pre-pandemic growth trajectories. It suggests that resolving trade disputes could modestly boost global growth—by as much as 0.2 percentage points in 2025 and 2026—if tariffs are reduced significantly through cooperative agreements.
In conclusion, the report urges policymakers in emerging markets to adapt through reforms and strategic integration. This includes forming new trade partnerships, improving fiscal policies, and investing in human capital and business environments. The World Bank stresses that a renewed commitment to global cooperation and internal economic resilience is essential to navigate the looming economic headwinds.
Source: Punch