Global growth stalls as tariffs, debt, policy shifts throttle recovery, World Bank warns

Editor's Note

The global economy is losing steam, with the World Bank forecasting the weakest growth in a non-recession year since 2008—citing protectionist trade policies, stubborn debt, and rising interest rates as key drivers of the downturn. According to the Axios June 9 article, the World Bank’s latest economic outlook projects global GDP growth will slow to just 2.3% in 2025—a sharp downgrade from its January forecast. World Bank Chief Economist Indermit Gill stated to the outlet that a once-promising stabilization has unraveled, warning that “the world economy today is once more running into turbulence.”

The article cites multiple causes for the global slowdown, chief among them the resurgence of tariffs and persistent geopolitical and economic uncertainty. The World Bank specifically points to trade policies enacted under President Trump’s second term, including recent US–China tariff negotiations, as key disruptors of global commerce. While a partial reduction in tariffs could offer some relief, the World Bank calculates it would add only 0.2 percentage points to global growth in 2025–2026—not enough to reverse the broader deceleration.

US economic expectations were also revised downward. The World Bank now predicts the US economy will expand by just 1.4% this year, nearly a full percentage point below previous projections. This drag, combined with similar slowdowns in other major economies, has deflated hopes for a “soft landing” in the wake of pandemic-related and supply chain crises.

Global trade growth, a crucial engine of economic expansion, is expected to be particularly weak. The World Bank projects trade will rise just 1.8% in 2025—down from 3.4% in 2024—and will not return to pre-pandemic norms in the foreseeable future. By 2027, trade growth is forecasted to reach only 2.7%, well below the 4.6% average of the 2010s.

Gill warned the conditions underpinning the past half-century’s economic success—such as low inflation, geopolitical stability, and historically low interest rates—are reversing. With high debt burdens and tighter monetary policy now entrenched, the margin for error in global economic policymaking has narrowed significantly.