Business
UN Predicts Subdued 2.8% Global Economic Growth in 2025 Amid Shifting Economic Trends
The global economy is forecast to grow at a subdued 2.8% in 2025, according to the United Nations’ “World Economic Situation and Prospects 2025” report. While this marks resilience amid inflation and geopolitical challenges, it underscores slower growth than the pre-pandemic average of 3%.
Key Drivers of Global Growth
- Asia’s Strong Performance:
- India: Projected growth of 6.6% in 2025, fueled by private consumption and investment growth. South Asia is expected to expand by 5.7% in 2025 and 6% in 2026.
- China: Anticipated growth of 4.8%, down slightly from 4.9% in 2024, as property-sector weaknesses and local government debt weigh on economic momentum.
- United States and Europe:
- The U.S. is projected to grow at 1.9% in 2025, slowing from 2.8% in 2024, driven by lower consumer and public-sector spending.
- Europe is expected to experience a modest recovery after underperforming in 2024.
- Other Notable Performances:
- Indonesia is cited as a robust contributor to global growth.
- Japan shows signs of recovery from near-recession phases.
Emerging Challenges
The report highlights significant risks to the global economy:
- China’s Structural Challenges:
Shrinking population and rising trade tensions could jeopardize medium-term growth unless addressed through structural reforms. - Monetary Tightening:
The prolonged period of monetary policy tightening remains a headwind for global growth. - Geopolitical Tensions:
Escalating trade disputes and regional conflicts continue to add uncertainty.
The Poverty Reduction Connection
The report emphasizes that economic growth has been instrumental in reducing poverty, particularly in Asia. Countries like China, India, and Indonesia have leveraged structural transformations to achieve unprecedented poverty alleviation.
A Resilient Yet Uneven Recovery
While the global economy avoids broad-based contraction, the recovery remains heavily reliant on a few large economies. Stable growth in nations like India and Indonesia offers optimism, but structural challenges in China and economic headwinds in developed economies temper the outlook.
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