World Bank Slashes Global Growth Forecast To Lowest Since 1960s Amid Trump Tariffs: 'If The Right Policy Actions Are Taken...'

The World Bank has significantly reduced its 2025 global growth forecast, pointing to the escalating trade tensions and policy uncertainty, particularly due to the wide-ranging tariffs imposed by U.S. President Donald Trump.

What Happened: The World Bank’s latest economic prospects report projects a global GDP growth of 2.3%, down from the 2.7% anticipated in January, reported South China Morning Post. According to Indermit Gill, the World Bank Group's chief economist, this marks the weakest performance in 17 years outside of global recessions.

Fragmented trade relations and elevated policy uncertainty have weakened global growth and inflation outlooks for both this year and the next. “Without a swift course correction, the harm to living standards could be deep,” Gill cautioned.

The World Bank projects that by 2027, global GDP growth will average just 2.5% for the 2020s—its slowest pace since the 1960s. This bleak outlook follows Trump's April decision to impose a 10% tariff on imports from nearly all of the U.S.’s trading partners.

The World Bank suggested that developing countries could boost GDP growth by reducing tariffs for all trade partners and expanding trade deals to cover broader cross-border regulations.

"If the right policy actions are taken, this problem can be made to go away with limited long-term damage,” stated Gill.

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Why It Matters: The World Bank’s revised forecast comes amid ongoing trade tensions and policy uncertainty, which have been exacerbated by the tariffs imposed by the Trump administration. This development could have significant implications for global markets and economies, potentially leading to increased volatility and reduced investor confidence.

Earlier in 2025, Trump deflected blame for the U.S. economy’s 0.3% contraction in the first quarter onto his predecessor, Joe Biden despite clear evidence indicating otherwise. This contraction was the first for the country in three years.

However, some experts, such as Tom Lee, co-founder and research head at Fundstrat Global Advisors, remain optimistic about the market’s future despite the recent volatility. Lee identified key indicators suggesting that the worst market decline may have passed and predicted a significant upside for stocks by 2026.

Invesco QQQ Trust, Series 1 QQQ and SPDR S&P 500 ETF SPY climbed 4.7% and 3.15% on a year-to-date basis.