The global economy in five charts

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A sharp increase in trade tensions and policy uncertainty is set to drive global growth this year to its slowest pace since 2008, outside of outright global recessions. These headwinds have led to growth forecasts being cut in nearly 70 percent of all economies—across all regions and income groups.

Global growth is projected to slow to 2.3 percent in 2025, nearly half a percentage point lower than the rate that had been expected at the start of the year. Over 2026-27, a tepid recovery is anticipated, with growth averaging only 2.5 percent and leaving global output materially below January projections. While the outlook is far from a global recession, the forecasts imply that average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s. 

The expected deterioration in growth is broad-based, with most of the world’s economies slowing relative to last year. Against the backdrop of a weaker external environment, progress by emerging market and developing economies (EMDEs) in spurring job creation and reducing extreme poverty rates, is anticipated to remain insufficient, leaving poverty rates above pre-pandemic levels in many low-income and fragile EMDEs.

Worsening growth prospects relative to January projections are driven primarily by a surge in policy uncertainty, which reached record highs in recent months. More generally, spikes in policy uncertainty can be paralyzing for consumers and businesses globally. As a result, a prospective recovery in two important drivers of long-term development—global investment and trade—has been disrupted. Global trade growth, in particular, is expected to slow sharply in 2025, to 1.8 percent. 

Figure 3 Global trade policy uncertainty

The subdued outlook is subject to further downside risks, including more persistent or higher policy uncertainty, a further escalation of trade tensions, heightened volatility in financial markets, and increased conflict and geopolitical stress. In particular, a sudden escalation in trade tensions in the near term could result in global trade seizing up , accompanied by a widespread collapse in confidence, surging uncertainty, and stress in financial markets. The combination of these shocks would reduce global growth by 0.5 and 0.4 percentage point in 2025 and 2026, relative to the baseline, tipping the world economy into an extended period of anemic growth.

Over the longer run, a major challenge confronts many EMDEs—ensuring the creation of sufficient employment opportunities for rapidly growing working-age populations—including in the poorest two regions—Sub-Saharan Africa (SSA) and South Asia (SAR)—and Middle East and North Africa (MNA). Taken together, SSA, SAR, and MNA are anticipated to add about 1 billion people to their working-age populations between 2025 and 2050. This increase is historically large relative to previous episodes of rapid working-age population expansion, in both numerical and percentage terms. Absent sufficient new job creation, various economic, social, and political pressures could rise in countries with fast-growing populations.