The global economy is set to suffer the consequences of heightened trade tension and policy uncertainty, with the World Bank estimating the pace of growth to fall to the slowest level since 2008 outside of global recessions.
The Washington-based multilateral lender projects world economy to expand 2.3 per cent this year, about half a percentage point lower than the estimates at the start of the year, it said in its latest Global Economic Prospects report.
The turmoil caused by Washington’s bid to levy historic tariffs on its global trade has resulted in “growth forecasts being cut in nearly 70 per cent of all economies – across all regions and income groups”, the lender said on Tuesday.
Global growth is projected to slow to 2.3 per cent this year, about half a percentage point lower than the rate that had been expected at the start of the year. A global recession is not expected. Nevertheless, if forecasts for the next two years materialise, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.
“Outside of Asia, the developing world is becoming a development-free zone,” World Bank Group’s chief economist Indermit Gill said.
Trending down for three decades
Growth in developing economies has been ratcheting down for three decades – from 6 per cent annually in the 2000s to less than 4 per cent in the 2020s.
“That tracks the trajectory of growth in global trade, which has fallen from an average of 5 per cent in the 2000s to … less than 3 per cent in the 2020s. Investment growth has also slowed, but debt has climbed to record levels,” Mr Gill added.
The World Bank forecast for the global output is even more conservative than that of the International Monetary Fund's, which in April, slashed its growth projections on tariffs hitting 100-year highs. The IMF also warned that trade tension between the world’s two largest economies and Europe would further slow growth.
The fund lowered its 2025 global growth forecast by 0.5 percentage point to 2.8 per cent.
Although Washington has paused the historic high tariffs for a 90-day period and is negotiating with China and its other trading partners including the EU, the uncertainty has already hit global economic and trade activity.
Global economic headwind is expected to hurt about 60 per cent of all developing economies this year, that are set to rise by 3.8 per cent in 2025, more than a percentage point lower than the average of the 2010s.
Low-income countries are expected to grow by 5.3 per cent this year – a downgrade of 0.4 percentage point from the forecast at the beginning of 2025, the World Bank said.
Against rising trade barriers, developing economies should “seek to liberalise more broadly by pursuing strategic trade and investment partnerships with other economies and diversifying trade – including through regional agreements”, the World Bank said.
Regional outlook
In the Middle East and North Africa region, the lender expects aggregate gross domestic product to expand 2.7 per cent this year and further strengthen to an average of 3.9 per cent in 2026 and 2027.
In East Asia and Pacific, growth is expected to slow to 4.5 per cent this year and further weaken to 4 per cent on average in the next two years.
The World Bank expects Europe and Central Asia region economy to slow to 2.4 per cent this year, edging up slightly 2.6 per cent in 2026 and 2027.
South Asian economy is set to moderate to 5.8 per cent this year, while sub-Saharan African economic output is expected to edge up slightly to 3.7 per cent in 2025, according to world Bank data.
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US PGA Championship in numbers
1 Joost Luiten produced a memorable hole in one at the par-three fourth in the first round.
2 To date, the only two players to win the PGA Championship after winning the week before are Rory McIlroy (2014 WGC-Bridgestone Invitational) and Tiger Woods (2007, WGC-Bridgestone Invitational). Hideki Matsuyama or Chris Stroud could have made it three.
3 Number of seasons without a major for McIlroy, who finished in a tie for 22nd.
4 Louis Oosthuizen has now finished second in all four of the game's major championships.
5 In the fifth hole of the final round, McIlroy holed his longest putt of the week - from 16ft 8in - for birdie.
6 For the sixth successive year, play was disrupted by bad weather with a delay of one hour and 43 minutes on Friday.
7 Seven under par (64) was the best round of the week, shot by Matsuyama and Francesco Molinari on Day 2.
8 Number of shots taken by Jason Day on the 18th hole in round three after a risky recovery shot backfired.
9 Jon Rahm's age in months the last time Phil Mickelson missed the cut in the US PGA, in 1995.
10 Jimmy Walker's opening round as defending champion was a 10-over-par 81.
11 The par-four 11th coincidentally ranked as the 11th hardest hole overall with a scoring average of 4.192.
12 Paul Casey was a combined 12 under par for his first round in this year's majors.
13 The average world ranking of the last 13 PGA winners before this week was 25. Kevin Kisner began the week ranked 25th.
14 The world ranking of Justin Thomas before his victory.
15 Of the top 15 players after 54 holes, only Oosthuizen had previously won a major.
16 The par-four 16th marks the start of Quail Hollow's so-called "Green Mile" of finishing holes, some of the toughest in golf.
17 The first round scoring average of the last 17 major champions was 67.2. Kisner and Thorbjorn Olesen shot 67 on day one at Quail Hollow.
18 For the first time in 18 majors, the eventual winner was over par after round one (Thomas shot 73).
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