Why the World Bank forecasts the worst decade for global growth in more than half a century

Loading ship — Photo foot, The international body anticipates a difficult decade amid commercial tensions.

Author, Writing
Author's title, BBC News World
June 12, 2025

The world economy will experience the weakest economic growth in more than half a century, according to World Bank projections (BM).

In the midst of the uncertainty generated by the tariff policies of the president of the United States, Donald Trump, the international organism predicts global growth of only 2.3% for this year and a road uphill during this decade.

Donald Trump's decision to impose a 10% universal tariff on all imports that enter the United States and tariffs higher than products from countries such as China, as well as the increase in taxes on steel and aluminum, has caused chaos and confusion in the international trade system.

In May, a resolution of a US trade court declared most of the global tariffs imposed by the US president illegal, although the White House won an appeal before a court to keep them in force for now.

This changing commercial panorama has made the World Bank a less optimistic perspective on global economic growth.

“In a context of greater political uncertainty and greater commercial barriers, the world economic context has become more complex,” says the agency's report, adding that there will be greater political uncertainty that will weaken confidence due to the possibility of “new rapid changes” in the restrictive measures of trade by the countries.

Tariffs could cause a paralysis of world trade in the second half of this year, accompanied by a generalized collapse of trust, a growing uncertainty and turbulence in financial markets, points the BM report.

But the agency did not predict a world recession, stating that the chances of occurring are less than 10%.

Photo foot, Trump's commercial policy will affect world growth, according to the BM.

A historical blow to growth

The world economy is once again in a turbulence situation, the economists of the BM Indermit Gill and Ayhan Kose wrote in a blog.

Without a rapid correction of the course, the damage to the standard of living of the people “could be deep,” they argued.

Commercial disputes, says economists, have disrupted many of the political certainties that helped reduce extreme poverty and expand prosperity after the end of World War II.

His analysis states that many of the forces that promoted the “great economic miracle” of the last 50 years (when GDP per capita in developing countries almost quadrupled and more than 1,000 million people left extreme poverty) have been reversed.

From that perspective, the agency's report warns that, if forecasts are met, the average world growth in the 2020s “will be the slowest of any decade” since the end of the 1960s.

Weaker growth, points out the analysis, will affect job creation, poverty reduction and income inequality.

Steel industry worker — Photo foot, Economists are concerned about the impact of tariff conflicts on exports in Latin America.

And Latin America?

The deceleration of global economic growth is bad news for Latin America, a region that has just left a lost decade and was hit strongly by the pandemic, tells BBC Mundo Benjamin Gedan, director of the Latin America program of the Wilson Center Studies Center.

If the commercial war reduces the prices of exports that support the largest South American economies, he adds, that could have serious economic, social and political effects.

This is also raised by the World Bank analysis in the section referring to Latin America, where it points out that the increase in commercial barriers will affect the region.

On the tariffs imposed by Trump, Gedan argues that this policy reminds him of the path that some Latin American nations toured in the past.

“The frustrating for economists in the region is that the US is replicating the errors of the Latin American industrial policy of the postwar period,” he says, referring to the time of the so -called 'industrialization for import substitution', despite his “lousy history.”

Import substitution is an economic development strategy that seeks to promote local production of goods that were previously imported.

Its objective is to reduce the dependence of foreign imports and strengthen national industries, an approach that has become central in Donald Trump's speech.

Construction workers. — Photo foot, Mexico will register a minimum growth level this year, according to the World Bank.

How is 2025 come in the region? The World Bank projects economic growth of 2.3% for Latin America.

In that scenario, the country with the worst prognosis in the region is Mexico, whose economy will experience a tiny growth of just 0.2% this year.

Washington imposed on Mexico a 25% tariff on imports that are not included in the North American Free Trade Agreement (T-MEC).

“This has weakened Mexico's exports” and has generated uncertainty in a country that sent 80% of its merchandise exported to 2024, the international agency points out.

In addition to Mexico, among the great economies of the region, Brazil, Chile, and Peru will have less economic growth than the one registered last year, while the projections for Colombia and Argentina are rather positive.

The international influence on the economic direction of Latin America, warns the World Bank, will depend largely on the growth of the US and China, the two largest markets for the products in the region.