Steady Global Growth Forecast

The World Bank has projected that the global economic growth rate will remain steady at 2.7% for the years 2025 and 2026, mirroring the growth rate of 2024. This forecast highlights a period of stability but also raises concerns about the sufficiency of this growth rate to support sustained economic development amidst various global challenges.

Challenges Ahead

"Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters," the institution noted in a statement on Thursday.

Impact on Developing Economies

Developing economies are expected to grow by 4% in 2025-2026, but face the lowest long-term growth since 2000. According to simulations, a 10-point increase in US tariffs could potentially reduce global growth by 0.3 percentage points if other countries respond similarly. Such a tariff hike would also result in a 0.4% decrease in US GDP, escalating to a 0.9% reduction if trade partners impose retaliatory measures.