World Bank Warns of Slowing Global Growth in 2025 Amid Trade Barriers and Policy Uncertainty

The World Bank, in its latest Global Economic Prospects report released on Tuesday, has painted a cautious picture of the world economy for 2025. The report warns that global economic growth is expected to slow down significantly this year, largely driven by a rise in trade barriers, policy uncertainty, and the lingering effects of tight financial conditions in both developed and emerging markets.

According to the World Bank’s projections, global GDP growth is forecast to drop to 2.4% in 2025, down from 2.6% in 2024. This marks the slowest half-decade of economic expansion since the 1990s. The report cites several key reasons for the downturn: rising protectionism in global trade, including tariffs and restrictions on key goods and technologies; uncertainty in policy environments, especially in large economies such as the U.S., China, and the European Union; and persistently high interest rates following years of inflationary pressure and central bank tightening.

The slowdown is expected to be particularly harsh for developing and emerging markets, where tighter global financial conditions are amplifying debt burdens and investment uncertainty. Growth in developing economies is projected to hover around 3.9%, well below pre-pandemic trends. Several low-income countries face fragile fiscal positions, reducing their ability to respond to shocks. The World Bank emphasized that private sector investment has weakened, infrastructure projects have been delayed, and trade fragmentation has reduced export opportunities.

A significant driver of the negative outlook is the increase in global trade tensions. Major economies are increasingly adopting “nearshoring” and “friendshoring” strategies to reduce dependency on certain trading partners. Export controls and retaliatory tariffs, particularly in high-tech sectors, have added to instability in global supply chains. The report notes that trade growth, once a powerful engine of global GDP, has now fallen below the average rate of economic growth, a rare and troubling trend.

The World Bank also highlights several downside risks that could worsen the global outlook: geopolitical conflicts, especially the ongoing Russia–Ukraine war and rising tensions in the Asia-Pacific region; financial instability, particularly in heavily indebted nations or those with currency mismatches; and climate-related disasters, which could disrupt agriculture and industrial production across multiple regions.

To reverse the slowdown, the World Bank urges governments to reduce policy and trade uncertainty by committing to rules-based trade and regulatory frameworks; strengthen domestic investment in infrastructure, health, and education to boost productivity; and enhance fiscal transparency and reduce public debt burdens sustainably. The institution also calls for greater multilateral cooperation to address fragmented supply chains and ensure stable financial flows to lower-income countries.

The World Bank’s report is a stark reminder that the world economy faces a challenging and uncertain year in 2025. As global growth falters amid rising trade barriers and unpredictable policy moves, the need for coordinated, transparent, and pro-growth policies has become more urgent than ever. Without bold action, the economic recovery that began post-pandemic may lose momentum—leaving millions at risk of falling into poverty or prolonged financial distress.