EDITORIAL: The World Bank in its semi-annual Global Economic Prospects has maintained that the global economy is proving more resilient than expected prompting it to project a slight improvement in the global Gross Domestic Product (GDP) growth over forecasts made in June 2025 – upped by two-tenths of a percentage point – adding that growth would remain concentrated in the advanced economies and too weak to reduce extreme poverty.
The growth is projected at 2.6 percent this year against 2.7 percent last year and 2.7 percent for 2027 – a projection that took account of far-reaching US tariffs announced on 3rd April 2025 on all trading partners, including Israel, which threatened to dismantle the then existing edifice of international trade triggering the threat of trade wars.
He subsequently negotiated the tariffs downward with several trading partners, including China, which stood out as the only country that pushed back against the tariffs possible due to its control of over 90 percent of the supply chain of refined rare earths.
While the Bank’s expertise to delve in political matters that may impact negatively on growth is limited (both nationally and globally) yet one would have hoped that the clouds gathering on global geopolitics had been taken into account.
While the two major conflicts continue to this day – Russia/Ukraine and Israeli bombardment on all neighbours followed by an attack on Doha, Qatar, in September last year (as part of its decapitation strategy) in spite of a ceasefire deal with Lebanon and Gaza – and therefore could have been factored in yet these conflicts have visibly escalated in recent months/weeks.
READ MORE: Pakistan’s GDP growth expected to stay at 3%: World Bank
Reports suggest that the attempted attack on Putin’s official residence in the Novgorod region was not possible without Western support which prompted the second Oreshnik, an intermediate range hypersonic ballistic missile with the potential of reaching up to 3,417 miles, that as per the Russians disabled Lviv State Aviation Repair Plant which services Ukrainian Air Force jets, including the Western supplied F-16s and MiG 29s.
The US seizure of the Russian-flagged ship near Iceland, and the recent announcement by the UK that it would seize all shadow fleet tankers, defined loosely as those not insured in London, which controls 90 percent of all shipping insurance which a sanctioned country is not eligible for, is likely to stoke the gods of war.
The possibility of another US/Israeli attack on Iran is gathering momentum with European heads of government threatening action as well. Merz of Germany with less than 20 percent popularity has accused the Iranian government of being unrepresentative of the people while the British government summoned the Iranian Ambassador to express its concerns at the largely unverified footage being shown on mainstream media.
President Trump has imposed 25 percent tariffs on all countries that continue to trade with Iran with China announcing its “position on the tariff issue is very clear that there are no winners in a tariff war. China will resolutely safeguard its legitimate rights and interests.” This is expected to reignite the trade war between the two countries with obvious negative repercussions on the global growth rate.
Projections based on statements indicate that he US takeover of Greenland may well be without a single shot fired though many maintain the Europeans may be thinking that their tactical support for an attack on Iran may indefinitely postpone President Trump’s pledge to annex the Danish-held autonomous region.
With respect to Pakistan, the World Bank has projected a GDP growth of 3 percent – a rate that indicates staying the course with respect to severely contractionary monetary (the 10.5 percent discount rate is well above the regional average) and fiscal policies (with large scale manufacturing sector players citing massive closures, around 150 units textile units alone, while currently engaging in a dialogue with the government to ease these policies if the targeted growth rate is to be achieved) agreed with the International Monetary Fund. It is also relevant to note that India continues with the violation of the Indus Waters Treaty, which would have severe repercussions on farm growth as well as on the quality of life of the people.
To conclude, the growth rate of the advanced Western economies based on their continued weaponization of sanctions is likely to curtail their collective growth to below 2 percent; and if any of the conflicts become more widespread, with the likelihood ever rising as rhetoric becomes more savage, then the scale of destruction may well push global growth into negative territory.
Copyright Business Recorder, 2026
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