World Bank Cuts Growth Forecast: Southeast Asia Gets Reality Check on Trade War Economics

By Simon Lai-Vinh | The Audacity Report

The Situation

The World Bank just delivered news that surprised absolutely no one paying attention: global growth is officially terrible. They slashed 2025 forecasts to 2.3%, down from 2.7% in January. To put this in perspective, we're looking at the slowest growth since 2008, excluding actual recessions¹. For Southeast Asia, this isn't just bad news—it's a masterclass in how trade wars turn economic textbooks into expensive paperweights.

Mexico got particularly hammered with growth expectations cut to 0.2%. Thailand faces a more modest cut to 2.9%, though natural disasters and global headwinds threaten worse outcomes. Vietnam maintains relatively strong growth projections of 6-6.8% for 2025, benefiting from supply chain diversification, but even opportunity comes with complications when your biggest customers are broke.

How We Got Here

Remember when "trade wars are easy to win" was more than just a meme? The World Bank remembers. U.S. tariffs jumped from under 3% to mid-teens, triggering the predictable response of retaliatory measures. What started as economic posturing became a full-contact sport with real casualties.

The numbers tell the story better than any political speech. Global trade growth fell to 1.8% in 2025 from 3.4% in 2024. That's not a correction—that's economic gravity working exactly as physics textbooks promised. When the world's two largest economies decide to play chicken with supply chains, everyone else becomes roadkill.

Southeast Asian nations found themselves caught in the crossfire of something they didn't start and couldn't control. Export-dependent economies discovered what happens when your customers suddenly can't afford your products because they're too busy fighting over who pays more taxes on aluminum.

The Technical Reality

Here's where the economics gets uncomfortable. The World Bank warns that a further 10% U.S. tariff hike could slice another 0.5 percentage points off global growth. For context, that's like removing the entire economic output of a medium-sized country just to prove a point about trade balances.