WASHINGTON (AP) — Trade Wars : The World Bank issued a grim update to its Global Economic Prospects report this week, sharply downgrading global and U.S. growth projections due to the widening impact of President Donald Trump’s trade wars.
“The world economy today is once more running into turbulence,” wrote Indermit Gill, the World Bank’s chief economist. “Without a swift course correction, the harm to living standards could be deep.”
📉 Key Forecasts
U.S. economic growth is now expected to slow to 1.4% in 2025, down from 2.8% in 2024 — and significantly below the 2.3% forecast made in January 2025.
Emerging markets are expected to struggle disproportionately due to reduced demand, rising inflation, and tightening financial conditions.
⚠️ What’s Driving the Decline?
The World Bank squarely points to a “substantial rise in trade barriers”, implicitly referencing the new tariffs imposed under Trump’s administration:
10% blanket tariffs have been levied on imports from nearly every major trading partner, including the European Union, Canada, Mexico, China, India, and Japan.
These tariffs have:
Increased costs for U.S. consumers and manufacturers
Disrupted supply chains
Triggered retaliatory tariffs that have hurt U.S. exports, especially in agriculture and manufacturing
🧮 The Missed “Soft Landing”
Just six months ago, the global economy seemed poised for a “soft landing” — easing inflation without major shocks. But this latest data shows that:
Inflationary pressures are not subsiding fast enough.
Monetary tightening by major central banks is cooling off investment.
Trade policy shocks have injected instability into both developed and developing economies.
🧠 Expert Insight
Economists warn that prolonged uncertainty and protectionism could reverse gains made over the last decade in global poverty reduction and productivity.
“Protectionist policies rarely deliver long-term economic gains,” said a senior World Bank analyst. “They may secure short-term political wins, but the broader global economy, and ultimately the U.S. itself, pays the price.”
🗂️ Summary Table
Indicator
2024
Jan 2025 Forecast
Current 2025 Forecast
U.S. GDP Growth
2.8%
2.3%
1.4%
Global GDP Growth
2.8%
2.7%
2.3%
EU GDP Growth
1.1%
0.9%
0.7%
China GDP Growth
5.2%
4.8%
4.5%
India GDP Growth
6.7%
6.5%
6.3%
🧭 Implications for Your Readers
Consumers will face rising costs for everything from electronics to groceries.
Small businesses may struggle with rising import costs and supply volatility.
Investors should prepare for continued market instability and geopolitical risk.
Policymakers face a tough road balancing inflation, trade tensions, and social stability.
