The global economy is not in recession. But the World Bank has just delivered a warning that may matter almost as much: the world is heading toward its weakest growth outside a global recession since 2008.

On June 10, the World Bank cut its 2025 global growth forecast to 2.3%, almost half a percentage point below the rate expected at the beginning of the year. Growth forecasts were reduced for nearly 70% of economies.

The cause is not one economic crisis.

It is uncertainty.

Trade tensions have increased. Tariffs have risen. Businesses are unsure where future production costs will sit. Investment decisions are becoming harder to make because companies cannot confidently predict the rules governing international trade.

This matters because economic growth depends partly on expectations.

A company does not build a factory simply because demand is strong today. It builds one because it expects demand to remain strong for years.

When trade policy becomes unpredictable, that calculation becomes harder.

The consequences are particularly serious for developing economies.

The World Bank expects developing economies to grow by 3.8% in 2025, more than a percentage point below their average growth rate during the 2010s. Per-capita income growth is expected to reach only 2.9%, compared with a much stronger historical trend.

That matters because GDP growth is not just a market statistic.

For emerging economies, faster growth can mean more jobs, rising incomes and faster poverty reduction. Slower growth makes each of those goals harder.

There is a potential escape route.

The World Bank estimates that if current trade disputes were resolved and tariffs were roughly halved from their late-May levels, global growth could be around 0.2 percentage points higher on average across 2025 and 2026.

That number looks small.

It is not.

When applied to an economy worth tens of trillions of dollars, a 0.2 percentage-point improvement represents hundreds of billions of dollars in additional economic activity.

The global economy therefore does not need another stimulus package to solve this problem.

It needs something less dramatic but arguably more valuable: predictability.

The question for the second half of 2025 is whether governments can reduce the uncertainty that is now becoming a tax on investment itself.