In the latest edition of its Global Economic Prospects report, issued Tuesday (June 10), the bank reduced its global growth forecast for the year by 0.4 percentage point to 2.3%, saying that higher tariffs and increased uncertainty were a “significant headwind” for nearly all economies.
The bank slashed its forecasts for 70% of the world’s economies, including the U.S., China and Europe, from levels it forecast just before President Donald Trump took office.
“Only six months ago, a ‘soft landing’ appeared to be in sight: the global economy was stabilizing after an extraordinary string of calamities both natural and man-made over the past few years,” Indermit Gill, the World Bank’s chief economist, wrote in the report.
“That moment has passed. The world economy today is once more running into turbulence. Without a swift course correction, the harm to living standards could be deep. International discord—about trade, in particular—has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II.”
The 2.3% figure, Gill added, is the weakest performance in 17 years, setting aside global recessions. By 2027, the report said, global growth is forecast to average just 2.5% in the 2020s, the slowest pace for any decade since the 1960s.
In other tariff-related news, PYMNTS on Tuesday examined forthcoming research showing that a vast majority of U.S. companies have no plans to reshore because of the trade war.
The soon-to-be-released report from PYMNTS Intelligence shows that in mid-May, only 5.9% of U.S. firms with at least $1 billion in annual revenues had replaced their foreign suppliers with domestic ones.
That’s after a little more than 9% of those companies reported having done so in April. Among companies that haven’t taken that measure, fewer than 3 in 10 said in May that they might do so, down from 36.7% the month before.
“The responses so far don’t mean that corporate America is fully calling what they might appear to see as the administration’s bluff,” PYMNTS wrote.
“Instead, they’re scrambling to achieve operational efficiencies in the here and now as they simultaneously game out potential longer-term impacts on their businesses. Put otherwise, you can be optimistic about long-term actions on tariffs and still be rattled by uncertainty that requires action now.”
