Global economic growth is expected to decline this year due to increased trade barriers and policy uncertainty, the World Bank said in a report published on Tuesday.
Growth is projected to weaken to 2.3 percent, or nearly half a percentage point lower than expected at the start of the year, according to the Global Economic Prospects report.
“The global outlook is predicated on tariff rates close to those of late May prevailing,” it said.
“Accordingly, pauses to previously announced tariff hikes between the United States and its trading partners are assumed to persist.”
Although a global recession is not expected, average global growth is on track to be the slowest of any decade since the 1960s.
Poor countries suffer
Growth forecasts are being slashed in nearly 70 percent of all economies, with the poorest countries most affected.
In most developing countries, growth is expected to average nearly 60 percent, reaching 3.8 percent in 2025 before increasing to an average of 3.9 percent in the following two years — more than a percentage point lower than the average in the 2010s.
The slowdown will impact efforts by developing countries in areas such as job creation, poverty reduction, and closing income gaps with richer economies.
“The world economy today is once more running into turbulence. Without a swift course correction, the harm to living standards could be deep,” said Indermit Gill, Senior Vice President and Chief Economist, World Bank.
The report calls for rebuilding trade relations as “economic cooperation is better than any of the alternatives – for all parties,” he said.
Countries are also urged to improve business climates and to promote employment by ensuring workers are equipped with necessary skills.
