The global economy, despite being battered by inflationary pressures and geopolitical conflicts in recent years, is forecast to grow at a subdued rate of 2.8% in 2025, according to the United Nations.
The projection, released in the “World Economic Situation and Prospects 2025” report on Thursday, underscores the resilience of major economies while highlighting ongoing vulnerabilities.
The UN report credits the anticipated growth to steady, albeit slowing, economic performances from key players like the United States and China, coupled with robust growth prospects in India and Indonesia.
Meanwhile, the European Union, Japan, and the United Kingdom are predicted to see modest recoveries, reflecting a mixed global economic landscape.
“We are in a period of stable, subpar growth,” said Shantanu Mukherjee, chief of the Global Economic Monitoring Branch at the UN’s Department of Economic and Social Affairs. He emphasised that while growth remains below pre-pandemic levels, the underlying global economic mechanisms are functioning steadily.
In the United States, the economy exceeded expectations in 2024 due to strong consumer spending and public-sector investment. However, growth is projected to slow from 2.8% in 2024 to 1.9% in 2025 as fiscal stimuli wane.
China, the world’s second-largest economy, is expected to experience a marginal decline in growth from 4.9% in 2024 to 4.8% in 2025. Structural issues, including weaknesses in the property sector and lower domestic consumption, are cited as key challenges. The Chinese government is implementing measures to address local government debt, stimulate property markets, and boost demand, but the report warns that rising trade and technology tensions and a shrinking population could hinder medium-term growth prospects.
India is projected to lead South Asia with a growth forecast of 6.6% in 2025, driven by strong private consumption and investment. The broader South Asian region is expected to grow by 5.7% in 2025 and 6% in 2026, cementing its role as a key driver of global economic momentum.
The report also notes that Europe and Japan are poised for gradual recovery following near-recessionary conditions in 2024. European growth is expected to pick up incrementally, while Japan seeks to rebound from periods of economic stagnation.
Highlighting the broader picture, Li Junhua, director of the Economic Analysis and Policy Division, pointed out that global poverty reduction efforts over the last three decades were largely driven by strong economic performance in Asia. Countries such as China, India, and Indonesia have achieved historic poverty alleviation through rapid economic growth and structural reforms.
While the global economy has avoided a widespread contraction, the UN cautions that recovery remains uneven and largely reliant on the performance of a few large economies. With global growth still below pre-pandemic levels, policymakers face the challenge of ensuring more inclusive and sustainable economic progress.
