Global economic growth is projected to remain at 2.8 per cent in 2025, unchanged from 2024, held back by the top two economies, the US and China, according to a United Nations report released on Thursday.
The World Economic Situation and Prospects report said that “positive but somewhat slower growth forecasts for China and the United States” will be complemented by modest recoveries in the European Union, Japan and Britain and robust performance in some large developing economies, notably India and Indonesia.
“Despite continued expansion, the global economy is projected to grow at a slower pace than the 2010-2019 (pre-pandemic) average of 3.2 per cent,” according to the report by the UN Department of Economic and Social Affairs.
"This subdued performance reflects ongoing structural challenges such as weak investment, slow productivity growth, high debt levels, and demographic pressures," it said.
The report said US growth was expected to moderate from 2.8 per cent last year to 1.9 per cent in 2025 as the labour market softens and consumer spending slows.
It said growth in China was estimated at 4.9 per cent for 2024 and projected to be 4.8 per cent this year, with public sector investments and a strong export performance partly offset by subdued consumption growth and lingering property sector weakness.
Europe was expected to recover modestly with growth increasing from 0.9 per cent in 2024 to 1.3 per cent in 2025, “supported by easing inflation and resilient labour markets”, the report said.
South Asia is expected to remain the world’s fastest-growing region, with regional GDP projected to expand by 5.7 per cent in 2025 and 6 per cent in 2026, supported by a strong performance by India and economic recoveries in Bhutan, Nepal, Pakistan and Sri Lanka.
India, the largest economy in South Asia, is forecast to grow by 6.6 per cent in 2025 and 6.8 per cent in 2026, driven by robust private consumption and investment.
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The report said major central banks are likely to further reduce interest rates in 2025 as inflationary pressures ease. Global 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.
It calls for bold multilateral action to tackle interconnected crises, including debt, inequality and climate change.
“Monetary easing alone will not be sufficient to reinvigorate global growth or address widening disparities,” the report added. – Reuters
