World Bank: Global Growth to Slow Slightly to 2.6% This Year Due to Tariff Impact

Upward Revision of 0.2 Percentage Points from Last June's Forecast

The World Bank (WB) has projected that global economic growth will slow slightly due to uncertainties such as U.S. tariffs.

Cargo is stacked on a container ship docked at Busan Port. Photo by Jin-Hyung Kang aymsdream@

In its Global Economic Prospects report released on January 13 (local time), the World Bank forecast global economic growth for this year at 2.6%, which is 0.1 percentage point lower than last year's estimated 2.7%. The World Bank explained that, ahead of the U.S. tariff hikes last year, there was a surge in trade volume and a rapid restructuring of global supply chains, which made the global economy more resilient than expected. However, it expects that such growth-boosting effects will disappear this year as both trade volume and domestic demand decrease.

The 2.6% growth rate forecast by the World Bank in this report is 0.2 percentage point higher than the 2.4% projected in its June report last year. The World Bank stated that the United States accounts for two-thirds of this upward revision, as the country is expected to achieve higher-than-anticipated growth. The U.S. growth rate is projected to rise slightly from 2.1% last year to 2.2% this year.

Meanwhile, China's growth rate is expected to fall from 4.9% last year to 4.4% this year, with the World Bank citing weakened consumer confidence, a slump in the real estate market, slowing employment, and a slowdown in manufacturing as the causes. For the East Asia and Pacific region excluding China, growth is projected at 4.6% last year and 4.5% this year.

South Korea's growth rate was not included in this report.

The World Bank warned that, in the short term, downside risks to the global economy are greater. It cautioned that if risks such as escalating trade conflicts, strengthened trade barriers, declines in asset prices and worsening financial market conditions, fiscal concerns, and higher-than-expected inflation materialize, growth could slow further.