03:22 PM EDT, 06/10/2025 (MT Newswires) -- The World Bank on Tuesday lowered its global and US economic growth projections for 2025 and 2026 amid trade tensions and policy uncertainty.

The World Bank now forecasts global gross domestic product to grow by 2.3% this year and 2.4% in 2026, down from its previous 2.7% estimated rate for both years.

The world's biggest economy is now projected to expand by 1.4% and 1.6% in 2025 and 2026, respectively, down by 0.9 and 0.4 percentage point from the forecasts announced in January.

"Heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008 outside of outright global recessions," the World Bank said in a statement. "The turmoil has resulted in growth forecasts being cut in nearly 70% of all economies -- across all regions and income groups."

In April, US President Donald Trump declared a 90-day pause on certain tariffs for countries that didn't retaliate to his reciprocal duties.

Trade discussions between US and Chinese officials continued for the second day in London on Tuesday. The talks are "going well, and we're spending lots of time together," CNBC reported, citing US Commerce Secretary Howard Lutnick. The two sides previously accused each other of violating their preliminary trade deal reached in May.

The latest outlook assumes that tariff pauses in effect as of late May will prevail through the forecast horizon, the World Bank said.

It revised down 2025 and 2026 growth forecasts for the euro area and Japan, while maintaining projections for China.

"Our analysis suggests that if today's trade disputes were resolved with agreements that halve tariffs relative to their levels in late May 2025, global growth could be stronger by about 0.2 percentage points on average over the course of 2025 and 2026," the World Bank said.

Tariff hikes and tight labor markets are putting upward pressure on global inflation, which is projected to average 2.9% in 2025, according to the report.