New York: The United Nations has indicated that global economic growth is anticipated to remain sluggish in 2025 due to persistent uncertainties, as detailed in its World Economic Situation and Prospects (WESP) 2025 report published on Thursday.
Despite the global economy showing resilience in the face of multiple compounding shocks, growth is still below the pre-pandemic average of 3.2 percent, hindered by weak investment, slow productivity improvements, and high levels of debt, according to the UN report.
The report forecasts that global economic growth will hold steady at 2.8 percent in 2025, the same as in 2024.
It also highlighted that reduced inflation and ongoing monetary easing in various economies could offer a slight uplift to global economic activity in 2025.
Nevertheless, significant uncertainty persists, with risks arising from geopolitical tensions, increasing trade disputes, and high borrowing costs in numerous regions.
These issues are particularly pressing for low-income and vulnerable nations, where inadequate and fragile growth threatens to further impede progress toward the Sustainable Development Goals (SDGs).
"Countries must not overlook these dangers. In our interconnected economy, disturbances in one part of the world can lead to price increases elsewhere. Every nation is impacted and must contribute to the solution—building on the advancements achieved," stated Antonio Guterres, United Nations Secretary-General, in the report's foreword. "We have charted a course. Now is the time to act. Together, let us make 2025 the year we set the world on a path toward a prosperous and sustainable future for everyone."
Economic growth in the United States is anticipated to slow from 2.8 percent in 2024 to 1.9 percent in 2025, influenced by a softening labor market and a decrease in consumer spending.
In Europe, a modest recovery is expected, with GDP growth rising from 0.9 percent in 2024 to 1.3 percent in 2025. This improvement is likely to be bolstered by easing inflation and resilient labor markets, although challenges such as fiscal tightening, weak productivity growth, and an aging population continue to impact the economic outlook.
East Asia is projected to experience a growth rate of 4.7 percent in 2025, primarily driven by China's anticipated stable growth of 4.8 percent, supported by strong private consumption throughout the region.
South Asia is set to maintain its position as the fastest-growing region, with GDP growth estimated at 5.7 percent in 2025, propelled by India's impressive expansion of 6.6 percent.
In Africa, growth is expected to increase slightly from 3.4 percent in 2024 to 3.7 percent in 2025, aided by recoveries in key economies such as Egypt, Nigeria, and South Africa. Nonetheless, ongoing conflicts, rising debt servicing costs, limited job opportunities, and the escalating effects of climate change pose significant challenges to the continent's economic prospects.
Additionally, the report indicates that global trade is projected to grow by 3.2 percent in 2025, following a rebound of 3.4 percent in 2024. However, trade tensions, protectionist measures, and geopolitical uncertainties present considerable risks to this outlook.
Global inflation is expected to decrease from 4 percent in 2024 to 3.4 percent in 2025, offering some relief to both households and businesses.
Central banks are anticipated to implement additional interest rate reductions in 2025 as inflationary pressures show signs of subsiding.
While inflation is predicted to decrease, numerous developing nations are likely to encounter inflation rates that exceed historical norms, with one in five expected to face double-digit inflation in 2025, according to the United Nations.
