Washington (Reuters) – The World Bank reduced its global growth forecast on Tuesday 0.4 percentage points for 2025, to 2.3%, believing that the increase in customs duties and growing uncertainty constitute a “significant brake” for almost all economies.

In its half-yearly report “global economic prospects”, the bank has revised its forecasts downwards for almost 70% of economies, including the United States, China and Europe, as well as six emerging regional markets, compared to the levels projected only six months ago, before the entry according to President Donald Trump.

The tenant of the White House upset the world trade with a series of intermittent tariff increases which have brought the effective rate of American customs duties to its highest level for almost a century, causing reprisals from China and other countries.

The World Bank is the latest institution to lower its growth forecasts due to the erratic trade policies of Donald Trump, although US officials insist that the negative consequences will be offset by a revival of investment and tax reductions still awaiting approval.

The bank does not go so far as to predict a recession, but estimates that global economic growth this year will be the lowest since 2008. By 2027, the average growth of global domestic product should only be 2.5%, the slowest rate since the 1960s.

The report aims to growth in global trade of 1.8% in 2025, compared to 3.4% in 2024, or about a third of the 2000s’ level. This forecast is based on customs duties in force at the end of May, in particular the 10% of floors imposed on almost all of the products imported into the United States. It excludes the increases announced by Donald Trump in April, then postponed to July 9 to allow negotiations.

The World Bank estimates that global inflation should reach 2.9% in 2025, remaining above the levels before the COVVI-19 pandemic, due to tariff increases and tense labor markets.

“The risks for global prospects remain clearly downward oriented,” writes the bank. It specifies that its models show that an additional increase of 10 percentage points of American customs duties, in addition to the rate of 10% already applied, and a proportional retaliation of other countries, could reduce the forecast by another 0.5 point for 2025.

Such a climbing of commercial barriers would lead to “a blocking of world trade in the second half of this year (…) accompanied by a general collapse of confidence, an increasing uncertainty and turbulence in the financial markets”, according to the report.

However, the World Bank estimates that the risk of a global recession remains less than 10%.

(Written by Andrea Shalal, Noémie Naudin, edited by Kate Entringer)

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