2020s may be the worst economic decade since the 1960s, says World Bank

WASHINGTON, UNITED STATES: The World Bank has lowered its growth forecasts, attributing the slowdown to Donald Trump’s trade conflicts. It warns that the 2020s could become the weakest decade for the global economy since the 1960s.

In its biannual Global Economic Prospects report, the Washington-based institution revised its 2020 global GDP growth projection downward to 2.3 percent from 2.7 percent in January. This would mark the slowest expansion outside of full recessions since 2008, primarily due to the economic costs associated with “international discord,” especially related to trade.

Since January, President Trump has implemented numerous trade measures, including tariffs on major economies and certain commodities like steel. While some tariffs have been rescinded, overall levels remain significantly elevated compared to before his administration, and trade policy uncertainty remains at an all-time high.

With a modest recovery forecasted at just 2.4 percent growth in 2026, the World Bank predicts this decade may be the weakest since the 1960s.

Indermit Gill, the bank’s chief economist, stated that decades of progress in developing countries have stalled in recent years. Investment and trade growth have slowed, and debt levels have increased. “Apart from Asia, the developing world is becoming a development-free zone,” he said, noting that growth in these economies has slowed from about 6% annually in the 2000s to under 4 percent in the 2020s.

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The report highlights that many of the factors driving the economic boom of the last 50 years—such as rising GDP per capita and the reduction of extreme poverty—are now reversing.

The World Bank calls on governments to work toward ending trade tensions and urges emerging and developing economies to strengthen their public finances through broader taxation and reforms to attract investment. The forecast assumes that the high retaliatory tariffs imposed by Trump in April will not be reimposed once the current 90-day pause ends. However, the bank warns that if tariffs rise further or trade uncertainty persists, the outlook could worsen.

Risks remain skewed to the downside, with potential declines in growth if trade restrictions escalate or policy uncertainty persists. Such scenarios could also lead to increased financial stress.

In recent months, sovereign bond yields have risen in many major economies amid ongoing tariff uncertainties and concerns over US fiscal sustainability. The report estimates that over half of low-income countries are either in debt distress or at high risk, a situation worsened by decreasing aid flows. The UK has significantly cut its aid budget to fund rising defense spending, while the US’s development agency, USAID, has been almost dismantled.

Amid mounting concerns about debt levels, advocacy groups are calling for a new process to review sovereign debt at the upcoming International Conference on Financing for Development in Seville.

While the Trump administration has expressed support for the World Bank, which provides financial aid to low-income nations, Treasury Secretary Scott Bessent warned that these countries should not expect “blank checks for vague marketing and half-hearted reform commitments.”