The United Nations has projected that global economic growth will remain subdued in 2025, with a growth rate forecasted at 2.8%, unchanged from 2024, as highlighted in its World Economic Situation and Prospects (WESP) 2025 report released on Thursday.
Key Findings from the Report:
- Weak Economic Growth:
Despite global resilience in the face of various shocks, the economy continues to grow at a rate below the pre-pandemic average of 3.2%. The report cited factors such as weak investment, sluggish productivity growth, and high debt levels as key constraints on global economic performance. - Challenges and Risks:
Ongoing geopolitical tensions, trade disputes, and high borrowing costs contribute to a fragile economic environment. These challenges are especially critical for low-income and vulnerable nations, where weak and fragile growth could impede progress toward the Sustainable Development Goals (SDGs). - Regional Economic Outlook:
- United States: Economic growth in the U.S. is expected to slow from 2.8% in 2024 to 1.9% in 2025, with softening labor markets and slowing consumer spending.
- Europe: Projected growth of 1.3% in 2025, up from 0.9% in 2024, as inflation eases and labor markets remain resilient. However, long-term challenges like weak productivity and an aging population persist.
- East Asia: Growth is forecasted at 4.7%, driven by China’s stable growth of 4.8% and robust private consumption across the region.
- South Asia: Expected to remain the fastest-growing region with 5.7% GDP growth in 2025, driven by India’s 6.6% expansion.
- Africa: Growth forecasted to rise modestly to 3.7% in 2025, with improvements in economies like Egypt, Nigeria, and South Africa, despite challenges like conflicts, high debt servicing, and climate change impacts.
- Global Trade and Inflation:
- Global trade is expected to grow at 3.2% in 2025, with a rebound of 3.4% in 2024. However, trade tensions, protectionism, and geopolitical uncertainties pose significant risks to this outlook.
- Global inflation is projected to decline from 4% in 2024 to 3.4% in 2025, providing some relief. However, many developing nations are expected to continue facing inflation above historical averages, with one in five countries projected to experience double-digit inflation.
UN Secretary-General’s Remarks:
In his foreword, Antonio Guterres, the United Nations Secretary-General, highlighted the interconnectedness of the global economy and stressed the need for bold actions to address these economic challenges. He called on nations to collaborate to rebuild and ensure prosperity for future generations.
“We’ve set a path. Now it’s time to deliver. Together, let’s make 2025 the year we put the world on track for a prosperous, sustainable future for all,” Guterres emphasized.
Conclusion:
The UN’s WESP 2025 report paints a cautious economic outlook for 2025, with global growth expected to remain subdued amidst ongoing uncertainties. Despite some positive developments, including lower inflation and easing monetary policies, countries face numerous challenges that require cooperative efforts to ensure a sustainable and prosperous future for all.