World Bank warns of 'weakest period'

The Bank has published the June edition of its Global Economic Prospects report.

The report states that growth forecasts have been downgraded for nearly 70 percent of economies, across all regions and income groups.

The Bank's report notes that due to rising trade tensions and policy uncertainty, global economic growth is expected to fall to its slowest pace since 2008 this year, excluding global recessions.

NO GLOBAL RECESSION EXPECTED

The report, which states that global economic growth is expected to slow to 2.3 percent in 2025, notes that this rate is nearly half a percentage point lower than the level projected at the beginning of the year.

The report indicates that the world economy is expected to grow by 2.4 percent next year and 2.6 percent in 2027.

In its forecasts published in January, the World Bank had projected that the global economy would grow by 2.7 percent this year and next year.

The report states that while a global recession is not expected, if the forecasts for the next two years materialize, the world economy will grow more slowly in the first seven years of the 2020s than at the beginning of any decade since the 1960s.

GROWTH EXPECTED TO SLOW

The report, which states that economic growth is expected to slow in nearly 60 percent of all developing economies this year, notes that it is projected to average 3.8 percent in 2025, before rising to an average of 3.9 percent in 2026 and 2027.

The report states that advanced economies are expected to grow by 1.2 percent this year, 1.4 percent next year, and 1.5 percent in 2027.

The Bank's report states that slowing growth will hinder the efforts of developing economies to create jobs, reduce extreme poverty, and close the income gap per capita with advanced economies.

Pointing out that increases in customs tariffs and tight labor markets are creating upward pressure on global inflation, the report notes that global inflation, which is projected to average 2.9 percent in 2025, continues to remain above pre-pandemic levels.

- Growth forecasts for the US and the Eurozone downgraded

The report, which also includes growth forecasts for countries, states that the growth expectation for the US economy for this year has been lowered from 2.3 percent to 1.4 percent, and the forecast for next year from 2 percent to 1.6 percent. It is noted that the country's economy is expected to grow by 1.9 percent in 2027.

The report states that the growth expectation for the Eurozone economy has been lowered from 1 percent to 0.7 percent for this year and from 1.2 percent to 0.8 percent for next year. It is stated that the Eurozone economy is projected to grow by 1 percent in 2027.

While no changes were made to the growth forecasts for the Chinese economy, it is noted that the country's economy is expected to grow by 4.5 percent this year, 4 percent next year, and 3.9 percent in 2027.

UPWARD REVISION FOR TURKEY

The report states that the Turkish economy is expected to grow by 3.1 percent this year, 3.6 percent next year, and 4.2 percent in 2027.

In its January forecasts, the World Bank had projected that the Turkish economy would grow by 2.6 percent in 2025 and 3.8 percent in 2026.

The report states that the relatively moderate growth projected for the Turkish economy this year reflects the effects of tight monetary policy, expected fiscal consolidation, and weak global economic activity in an environment of increasing uncertainty, while the upward revision in this year's growth forecast is largely attributed to stronger-than-expected growth in the fourth quarter of 2024 and the decline in global oil prices.

The report states that private consumption is expected to remain the main driver of growth in 2026 and 2027, supported by ongoing disinflation, but export growth is expected to remain limited due to the real appreciation of the lira, weak demand in the Eurozone, and uncertainty regarding trade policies in major economies.

News Source: AA