Donald Trump’s tariff wars will turn the 2020s into the slowest decade for global growth for more than half a century, according to the World Bank.
The Bank blamed ‘heightened trade tensions and policy uncertainty’ as it slashed its growth outlook for this year from 2.7 per cent to 2.3 per cent.
That is down from 2.8 per cent in 2024 and would be the weakest year – apart from the Covid pandemic in 2020 – since the global financial crisis.
And it said that if dismal forecasts over the next two years materialise – at 2.4 per cent for 2026 and 2.6 per cent for 2027 – average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.
Without naming the US President, the lender pointed to ‘a substantial rise in trade barriers’ as being behind the predicted slowdown.
The organisation said the US would see just 1.4 per cent growth in 2025, half the rate of last year and a downgrade from 2.3 per cent previously projected in January.
Trump tariffs: The World Bank pointed to ‘a substantial rise in trade barriers’ as being behind its predicted slowdown
The outlook for the eurozone was downgraded for this year from 1 per cent to 0.7 per cent. There was no specific forecast for the UK.
World Bank chief economist Indermit Gill said: ‘The world economy today is once more running into turbulence.
‘Without a swift course correction, the harm to living standards could be deep.’ Just six months ago, a so-called ‘soft landing’ – where inflation is reduced without causing the economy to crash – had appeared in sight, Gill said.
But now ‘international discord has upended many of the policy certainties that helped shrink poverty and expand prosperity after the end of the Second World War’, he added.
The World Bank provides grants and low-rate loans to poor economies, with the aim of reducing poverty and boosting living standards.
Its warning is even more pessimistic than that issued by the Organisation for Economic Cooperation and Development, which last week predicted world growth of 2.9 per cent this year and next.
However, hopes have been raised that tensions between the two main protagonists of the trade war, the US and China, may ease.
Representatives of the world’s two biggest economies met for a second day of talks in London yesterday as they sought a breakthrough.
Stocks were lifted by the talks, with the FTSE 100 closing just shy of an all-time high at 8853.08.
Oil prices have also received a boost, with the price of a barrel of Brent crude touching $68 a barrel, its highest level in seven weeks.
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