Kolkata: Brace for a decade of slowest growth of the global economy since the 1960s, the World Bank has ominously said, holding retaliatory tariffs unleashed by US President Donald Trump as the key villain and highlighted “substantial trade barriers” in a report. While economists in the US have been warning of the price rise and slowdown impact of the tariffs inside the US, the world Bank has now trimmed growth forecast of about two thirds of countries in the world compared to its last set of predictions which was done six months ago.
According to the World Bank, the rate of growth of the world economy will be 2.3% in 2025 and 2.6% for 2027. The 2.3% for the current year is 0.4% lower than what it predicted in January. Among the major economies which suffered a downgrade were the US, Japan and Europe. But the World Bank did not hold out the apprehension of a global recession. According to the agency’s experts, the chance of a global recession was less than 10%. Incidentally, the growth suffered in the 1960s due to a huge jump of crude prices in the global market — by almost four times.
Ominous words from World Bank
The World bank has warned of further cuts in growth forecast if the US raised tariffs. Quite predictably, the bank also cautioned about rising inflation. “Against the backdrop of heightened policy uncertainty and increased trade barriers, the global economic context has become more challenging,” the report said. Tariffs could lead to “global trade seizing up in the second half of this year, accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets,” it added.
World bank also pointed out that the world’s second largest economy, China, displayed financial stability and could take into sits stride “significant headwinds” even as its scaled down its growth forecast for the US — the world’s largest economy — in both 2025 and 2026.
The Moody’s recent downgrade and OECD’s
Major credit rating agencies such as Moody’s and S&P have already downgraded the US rating highlighted that the US federal government no longer deserves a top-tier “Aaa” rating. Moody’s, which was the latest to announce the downgrade in late May said that the US government keep son borrowing more and more money to pay its expenses and the administration just cannot manage its ballooning debt. In simple words, it’s a bad blow, apart from an image problem, since the downgrade means global investors would not lend money to Washington at low interest rates.
Recently, the OECD too has said that the US economy would suffer a significant slowdown from 2.8% in 2024 to 1.6% in 2025. The policcies of US President Donald Trump were held to be the headwonds for growth, causing uncertainty in the policy sphere, investor nervousness and inflation.
India’s GDP growth at 6.3%
Incidentally, in April the World Bank also scaled down India’s economic growth projection at 6.3% in FY26 from 6.7% in January. It has retained the Indian GDP growth forecast at that level. The reason was headwind from the global uncertainties, which RBI governor Sanjay Malhotra also mentioned in his briefing on June 6.
The World Bank report came after an OECD decision to scale down its growth outlook for the world economy. While OECD earlier forecast a growth rate of 3.1%, it revised it down to 2.9%. India, however, is expected to register growth rate of 6%, which will be the fastest among the major economies.
Almost all expert agencies from the World Bank to Moody’s have predicted that the reciprocal tariffs that US President Donald Trump is trying to enforce will trigger a collapse of confidence and turmoil in the financial markets. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
