UN predicts world economic growth to remain at 2.8% in 2025

Source: Reuters.

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%," 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% last year to 1.9% in 2025 as the labour market softens and consumer spending slows.

It said growth in China was estimated at 4.9% for 2024 and projected to be 4.8% 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% in 2024 to 1.3% 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% in 2025 and 6% in 2026, supported by a strong performance by India and economic recoveries in Bhutan, Nepal, Pakistan and Sri Lanka, the report said.

India, the largest economy in South Asia, is forecast to grow by 6.6% in 2025 and 6.8% in 2026, driven by robust private consumption and investment.

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% in 2024 to 3.4% 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.