Rama Krishna Sangem
The United Nations has warned that global economic growth will remain subdued in 2025, remaining at 2.8 per cent, the same as 2024. This is due to ongoing uncertainty, according to its latest World Economic Situation and Prospects (WESP) 2025 report, released on Thursday.
The report highlighted that while the global economy has shown resilience against multiple shocks, growth is still below the pre-pandemic average of 3.2 per cent.
Factors influencing global economic growth
Weak investment, slow productivity, and high debt levels are the key factors holding back progress. The UN notes that lower inflation and easier monetary policies in many countries could provide a small boost to economic activity in 2025. However, risks such as geopolitical conflicts, rising trade tensions, and high borrowing costs continue to create uncertainty.
UN Secretary-General Antonio Guterres emphasised the need for collective action, saying, “In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution. Together, let’s make 2025 the year we put the world on track for a prosperous, sustainable future for all.”
Regional growth highlights
According to the report, growth trends across regions show varying trajectories for 2024 and 2025. In the United States, growth is projected to slow from 2.8 per cent in 2024 to 1.9 per cent in 2025 due to a weaker labour market and reduced consumer spending. Europe is expected to see a modest recovery, with growth improving from 0.9 per cent to 1.3 per cent, supported by easing inflation and robust labour markets.
Africa’s growth is expected to rise from 3.4 per cent in 2024 to 3.7 per cent in 2025, supported by recoveries in key economies like Egypt, Nigeria, and South Africa, though challenges such as conflicts and climate issues persist.
Meanwhile, East Asia is expected to grow at 4.7 per cent, driven by China’s steady 4.8 per cent growth and strong private consumption.
India to lead expansion in South Asia
South Asia will remain the fastest-growing region, with a predicted 5.7 per cent growth, led by India’s 6.6 per cent expansion, the UN report said.
Global trade is expected to grow by 3.2 per cent in 2025, slightly down from 3.4 per cent in 2024. However, tensions in trade policies and geopolitical uncertainties pose risks.
Inflation is projected to decline from 4 per cent in 2024 to 3.4 per cent in 2025, offering some relief to households and businesses. Central banks are likely to cut interest rates further as inflation eases. However, many developing countries may still face high inflation, with one in five experiencing double-digit rates.
