The global economy appears set to weather tariffs and turmoil on the way to steady growth over the next two years — thanks largely to the “better-than-expected” performance of the United States, according to the World Bank’s latest forecast.
Global output this year is expected to expand at an annual rate of 2.6 percent, virtually unchanged from last year’s 2.7 percent pace, and should continue at the same speed through 2027, the World Bank said in its twice-annual assessment, which it released Tuesday in Washington.
Even so, amid continued trade policy uncertainty and armed conflict, the global economy this year is more likely to fall short of the World Bank’s estimate than to outperform, the report warned. The 2020s are shaping up as the weakest decade for global growth since the 1960s, when the world was divided between East and West and the U.S. was starting its slide into years of persistently high inflation.
“Global growth has unmistakably downshifted to a slower gear since the pandemic,” Indermit Gill, the bank’s chief economist, wrote in the forecast.
The global slowdown from pre-pandemic annual growth rates above 3 percent is proving to be especially damaging for developing economies. About one-quarter of those nations — most in Africa — have lower per-person incomes today than before the pandemic, while nearly all advanced economies boast higher marks, the report said.
The improved global picture represents an upgrade from the World Bank’s June projections, with about two-thirds of the improvement attributed to a sunnier U.S. outlook. The bank has increased its U.S. growth forecast to 2.2 percent this year, up from a 1.6 percent prediction six months ago, citing tax breaks and other elements in President Donald Trump’s signature fiscal legislation.
The Trump administration is likely to applaud the new projection, which is far cheerier than the warnings economists sounded following the president’s April announcement of comprehensive tariffs. But those import taxes are likely this year to take an increasing bite out of investment and consumer spending, eventually causing the economy to slow in 2027 below its potential for noninflationary growth, the bank said.
The U.S. economy grew at a 2.1 percent annual rate last year, much faster than the 1.4 percent the World Bank forecast in June, in part a result of the boom in spending on artificial-intelligence-related equipment and structures. But the economy performed worse than it had in 2024, when it grew by 2.8 percent.
This year, the U.S. economy should grow significantly faster than those of the euro area and Japan, which are both expected to post results below 1 percent. China, which continues to suffer from the aftermath of a property bubble, is projected to slow from a 4.9 percent pace last year to 4.4 percent this year and 4.2 percent in 2027.
In 2025, the global economy outpaced the bank’s initial estimates as businesses placed unusually large orders with suppliers to front-run Trump’s multiple tariff announcements. But this year, global trade flows are expected to weaken as precautionary buying declines, the bank said.
The consensus forecast on Wall Street calls for 2.5 percent global growth this year, close to the World Bank estimate. Economists at Goldman Sachs, anticipating strong results in the U.S. and China, are more optimistic. They expect growth of 2.8 percent.
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