Trade Wars Erode Economic Growth: A Global Forecast

The World Bank predicts that trade wars will significantly hamper economic growth worldwide, with the US economy set to grow by only 1.4% this year, compared to 2.8% in 2024. The global growth forecast has been downgraded as well, with concerns about failing to achieve a 'soft landing.'

Trade wars instigated by President Donald Trump are predicted to significantly slow down economic growth in the United States and globally, according to a World Bank report released on Tuesday.

While avoiding a direct mention of Trump, the World Bank cited a substantial rise in trade barriers as a key factor, projecting that the US economy will grow at just 1.4% this year, compared to 2.8% in 2024. This represents a considerable downgrade from the 2.3% growth earlier forecasted for 2025.

The global economic outlook has also dimmed, with the World Bank reducing its forecast for world growth this year by 0.4 percentage points, now expecting it to reach only 2.3% in 2025. World Bank chief economist Indermit Gill highlighted the challenges ahead, warning that without a swift course correction, living standards could suffer serious harm.

(With inputs from agencies.)