Citing trade wars, the World Bank sharply downgrades global economic growth forecast to 2.3%

WASHINGTON (AP) — President Donald Trump's trade wars are expected to slash economic growth this year in the United States and around the world, the World Bank forecast Tuesday.
Citing 'a substantial rise in trade barriers'' but without mentioning Trump by name, the 189-country lender predicted that the U.S. economy – the world's largest – would grow half as fast (1.4%) this year as it did in 2024 (2.8%). That marked a downgrade from the 2.3% U.S. growth it had forecast back for 2025 back in January.
The bank also lopped 0.4 percentage points off its forecast for global growth this year. It now expects the world economy to expand just 2.3% in 2025, down from 2.8% in 2024.
In a forward to the latest version of the twice-yearly Global Economic Prospects report, World Bank chief economist Indermit Gill wrote that the global economy has missed its chance for the 'soft landing'' — slowing enough to tame inflation without generating serious pain — it appeared headed for just six months ago. 'The world economy today is once more running into turbulence,' Gill wrote. 'Without a swift course correction, the harm to living standards could be deep.''
America's economic prospects have been clouded by Trump's erratic and aggressive trade policies, including 10% taxes — tariffs — on imports from almost every country in the world. These levies drive up costs in the U.S. and invite retaliation from other countries.
The Chinese economy is forecast to see growth slow from 5% in 2024 to 4.5% this year and 4% next. The world's second-largest economy has been hobbled by the tariffs that Trump has imposed on its exports, by the collapse of its real estate market and by an aging workforce.
The World Bank expects the 20 European countries that share the euro currency to collectively grow just 0.7% this year, down from an already lackluster 0.9% in 2024. Trump's tariffs are expected to hurt European exports. And the unpredictable way he rolls them out — announcing them, suspending them, coming up with new ones — has created uncertainty that discourages business investment.
India is once again expected to the be world's fastest-growing major economy, expanding at a 6.3% clip this year. But that's down from 6.5% in 2024 and from the 6.7% the bank had forecast for 2025 in January. In Japan, economic growth is expected to accelerate this year – but only from 0.2% in 2024 to a sluggish 0.7% this year, well short of the 1.2% the World Bank had forecast in January.
The World Bank seeks to reduce poverty and boost living standards by providing grants and low-rate loans to poor economies.
Another multinational organization that seeks to promote global prosperity — the Organization for Economic Cooperation and Development — last week downgraded its forecast for the U.S. and global economies.
Paul Wiseman, The Associated Press
Fehler beim Abrufen der Daten
Melden Sie sich an, um Ihr Portfolio aufzurufen.
Fehler beim Abrufen der Daten
Fehler beim Abrufen der Daten
Fehler beim Abrufen der Daten
Fehler beim Abrufen der Daten

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

32 minutes ago

• Yahoo

Top economist who previously sounded the alarm on tariffs sees a possible scenario where Trump ‘outsmarted all of us'

Torsten Sløk, chief economist at Apollo Global Management, laid out a potential scenario where President Donald Trump's tariffs are extended long enough to ease economic uncertainty while also providing a significant bump to federal revenue. That comes as the 90-day pause on Trump's 'reciprocal tariffs' is nearing an end. Businesses and consumers remain in limbo over what will happen next with President Donald Trump's tariffs, but a top economist sees a way to leave them in place and still deliver a 'victory for the world.' In a note on Saturday titled 'Has Trump Outsmarted Everyone on Tariffs?', Apollo Global Management Chief Economist Torsten Sløk laid out a scenario that keeps tariffs well below Trump's most aggressive rates long enough to ease uncertainty and avoid the economic harm that comes with it. 'Maybe the strategy is to maintain 30% tariffs on China and 10% tariffs on all other countries and then give all countries 12 months to lower non-tariff barriers and open up their economies to trade,' he speculated. That comes as the 90-day pause on Trump's 'reciprocal tariffs,' which triggered a massive selloff on global markets in April, is nearing an end early next month. The temporary reprieve was meant to give the U.S. and its trade partners time to negotiate deals. But aside from an agreement with the U.K. and another short-term deal with China to step back from prohibitively high tariffs, few others have been announced. Meanwhile, negotiations are ongoing with other top trading partners. Trump administration officials have been saying for weeks that the U.S. is close to reaching deals. On Saturday, Sløk said extending the deadline one year would give other countries and U.S. businesses more time to adjust to a 'new world with permanently higher tariffs.' An extension would also immediately reduce uncertainty, giving a boost to business planning, employment, and financial markets. 'This would seem like a victory for the world and yet would produce $400 billion of annual revenue for US taxpayers,' he added. 'Trade partners will be happy with only 10% tariffs and US tax revenue will go up. Maybe the administration has outsmarted all of us.' Sløk's speculation is notable as he previously sounded the alarm on Trump's tariffs. In April, he warned tariffs have the potential to trigger a recession by this summer. Also in April, before the U.S. and China reached a deal to temporarily halt triple-digit tariffs, he said the trade war between the two countries would pummel American small businesses. More certainty on tariffs would give the Federal Reserve a clearer view on inflation as well. For now, most policymakers are in wait-and-see mode, as tariffs are expected to have stagflationary effects. But a split has emerged. Fed Governor Christopher Waller said Friday that economic data could justify lower interest rates as early as next month, expecting only a one-off impact from tariffs. But San Francisco Fed President Mary Daly also said Friday a rate cut in the fall looks more appropriate, rather than a cut in July. Still, Sløk isn't alone in wondering whether Trump's tariffs may not be as harmful to the economy and financial markets as feared. Chris Harvey, Wells Fargo Securities' head of equity strategy, expects tariffs to settle in the 10%-12% range, low enough to have a minimal impact, and sees the S&P 500 soaring to 7,007, making him Wall Street's biggest bull. He added that it's still necessary to make progress on trade and reach deals with big economies like India, Japan and the EU. That way, markets can focus on next year, rather near-term tariff impacts. 'Then you can start to extrapolate out,' he told CNBC last month. 'Then the market starts looking through things. They start looking through any sort of economic slowdown or weakness, and then we start looking to '26 not at '25.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Hamilton Spectator

an hour ago

• Hamilton Spectator

Rejecting Trump's rhetoric, Maine's governor heads to Maritimes to build ties

HALIFAX - Maine's governor is heading to the Maritimes next week with hopes a charm offensive will slow the rapid drop in Canadian tourist visits to her state. In a release issued Friday, Janet Mills says she's aware the historically close relationship between New England and its northern neighbours has been challenged by U.S. president Donald Trump's tariffs and his rhetoric about Canada becoming the 51st state. According to U.S. federal border crossing data released Friday, 85,000 fewer Canadians entered Maine in May than in the same month a year ago, a drop of about 27 per cent. The governor says she will spend three days meeting with premiers, appearing in local media and visiting businesses in hope of sending a message that Maritimers remain 'welcome in Maine' despite Trump's trade policies. On Monday, the governor will stop in Saint John, N.B., where she intends to visit businesses with links to Maine and she then will travel to Fredericton to hold talks with New Brunswick Premier Susan Holt. On Wednesday, Mills will meet with Nova Scotia Premier Tim Houston in Halifax and tour a marine technology centre. Last month, the governor unveiled new, bilingual signs welcoming Canadian visitors, which are being placed in windows around the state. On June 13, in her weekly radio address, Mills said she wants to ensure the 'historic friendship and deeply intertwined economies last for generations to come.' 'It's not just our economies – we are connected so deeply by mutual economic advantages and on centuries-old familial, cuisine, language, and cultural bonds that far supersede politics,' she told her listeners, reminding them that Canada is the United States' closest and most important trading partner. The Democratic Party member said Trump's 'roller coaster tariffs' are unsettling business in her state and 'making our Canadian neighbors feel unwelcome in the United States.' In 2024, nearly 800,000 Canadian visitors spent approximately US$498 million in Maine, according to the state's Office of Tourism. Overall, the data showed Maine welcomed 14.8 million visitors, who spent more than US$9.2 billion, supporting 115,900 jobs and generating US$5.4 billion in wages. This report by The Canadian Press was first published June 21, 2025. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .

Gizmodo

an hour ago

• Gizmodo

The $50 Billion Company That Does Almost Nothing

Something strange is happening on Wall Street. It isn't Elon Musk, AI, or a late-night post from Donald Trump. It's a crypto company called Circle Internet Group, and it's making the market feel like the glory days of the dot-com bubble are back. Circle went public on June 5. In just eleven trading sessions, its stock exploded by an almost unprecedented 675%, adding over $42 billion to its market cap. The company now trades at a valuation that puts it in the same league as tech unicorns and AI moonshots, commanding a price that has investors paying, in essence, $295 for every $1 of its earnings. There's just one problem. Circle doesn't have revolutionary AI. It doesn't build sleek consumer gadgets. Its business model is shockingly simple. Here's how it works: You give Circle a dollar. They give you a digital token, called USDC, worth that same dollar. They then take your actual dollar, invest it in something safe like short-term U.S. Treasury bonds, and collect the interest. You get the token. They get the profit. That's it. That's the entire business. This has led critics to label Circle as little more than a glorified 'money wrapper.' So why is Wall Street treating it like the next Tesla? The answer is one word: stablecoin. USDC is a stablecoin, a digital token pegged to a stable asset, in this case, the U.S. dollar. The idea is that for every USDC token, there's a real dollar sitting in a reserve account. This makes it incredibly useful for crypto traders who need the speed of digital assets without the wild volatility of Bitcoin. And now, the bulls are betting that stablecoins are about to go mainstream. The Senate just passed the 'Genius Act,' landmark legislation that paves the way for banks, fintechs like PayPal, and even retailers like Walmart and Amazon to use stablecoins for payments. Suddenly, the dream of crypto becoming a real alternative to Visa or Mastercard seems within reach. Analysts are salivating. Citi predicts the stablecoin market could hit $3.7 trillion by 2030. In that scenario, Circle, as a neutral platform not tied to any single bank, is perfectly positioned to cash in. But there's a catch. The business model that seems so brilliant in a high-interest-rate environment is also its greatest weakness. 'Circle's whole business is literally glued to Fed policy,' one user wrote in a viral post on Reddit's r/wallstreetbets. 'It's a Treasury ETF in a trench coat.' If the Federal Reserve cuts rates, Circle's main revenue stream shrinks. There's also nothing stopping bigger players from launching their own lookalike stablecoins, erasing Circle's edge overnight. If everyone's offering the same thing, Circle's moat starts looking very shallow. And yet, Wall Street is piling in like it's the next OpenAI. What if regulators change their tune? The entire model could be at risk. The business is remarkably fragile. When contacted by Gizmodo, a spokesperson said the company was in a post-IPO 'quiet period,' legally restricting it from making promotional statements. For now, the hype is winning. Circle's stock is on fire, fueled by the promise of a future where we all pay for our coffee with digital dollars. But beneath the surface, this $50 billion company doesn't innovate or disrupt. It just holds your cash, gives you a digital receipt, and pockets the interest. And in the bizarre world of 2025 finance, that's apparently enough to be crowned the new king of Wall Street.