Global Growth To Remain Subdued Amid Lingering Uncertainty, Warns UN Report

Friday, 10 January 2025, 9:32 am
Press Release: UN Department of Global Communications

New York, 9 January 2025 – Global
economic growth is projected to remain at 2.8 per cent in
2025, unchanged from 2024, according to the United Nations
flagship report, World Economic Situation and Prospects
(WESP) 2025, released today. While the global economy has
demonstrated resilience, withstanding a series of mutually
reinforcing shocks, growth remains below the pre-pandemic
average of 3.2 per cent, constrained by weak investment,
sluggish productivity growth, and high debt
levels.

The report notes that lower inflation and
ongoing monetary easing in many economies could provide a
modest boost to global economic activity in 2025. However,
uncertainty still looms large, with risks stemming from
geopolitical conflicts, rising trade tensions and elevated
borrowing costs in many parts of the world. These challenges
are particularly acute for low-income and vulnerable
countries, where sub-par and fragile growth threatens to
further undermine progress towards the Sustainable
Development Goals (SDGs). 

“Countries cannot
ignore these perils. In our interconnected economy, shocks
on one side of the world push up prices on the other. Every
country is affected and must be part of the
solution—building on progress made,” said António
Guterres, United Nations Secretary-General, in the foreword
to the report. “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.”

Regional economic outlook: Diverging
growth prospects
Growth in the United States is
projected to moderate from 2.8 per cent in 2024 to 1.9 per
cent in 2025, as the labour market softens, and consumer
spending slows. Europe is expected to recover modestly, with
GDP growth increasing from 0.9 per cent in 2024 to 1.3 per
cent in 2025, supported by easing inflation and resilient
labour markets, though fiscal tightening and long-term
challenges such as weak productivity growth and an ageing
population, continue to weigh on the economic
outlook.

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East Asia is forecast to grow by 4.7 per
cent in 2025—driven by China’s projected stable growth
of 4.8 per cent—supported by robust private consumption
across the region. South Asia is expected to remain the
fastest-growing region, with GDP growth projected at 5.7 per
cent in 2025, led by India’s robust 6.6 per cent
expansion. Growth in Africa is forecast to rise modestly
from 3.4 per cent in 2024 to 3.7 per cent in 2025, thanks to
recoveries in major economies including Egypt, Nigeria, and
South Africa. However, conflicts, rising debt-servicing
costs, lack of employment opportunities and increasing
severity of climate-change impacts weigh on Africa’s
outlook.

Trade rebound and monetary
easing
Global trade is expected to grow by 3.2
per cent in 2025, following a rebound of 3.4 per cent in
2024 driven by improved exports of manufactured goods from
Asia and strong services trade. However, trade tensions,
protectionist policies, and geopolitical uncertainties are
significant risks to the outlook. Global inflation is
projected to decline from 4 per cent in 2024 to 3.4 per cent
in 2025, providing some relief to households and businesses.
Major central banks expected to further cut interest rates
in 2025 as inflationary pressures continue to ease. While
continuing to moderate, inflation in many developing
countries is expected to remain above recent historical
averages, with one in five projected to face double-digit
levels in 2025.

Threats from high
debt-servicing burdens and elevated food
inflation
For developing economies, easing
global financial conditions could help reduce borrowing
costs, but access to capital remains uneven. Many low-income
countries continue to grapple with high debt-servicing
burdens and limited access to international financing. The
report emphasizes that Governments should seize any fiscal
space created by monetary easing to prioritize investments
in sustainable development, especially in critical social
sectors.

Despite easing global inflation, food
inflation remains elevated, with nearly half of developing
countries experiencing rates above 5 per cent in 2024. This
has deepened food insecurity in low-income countries already
facing extreme weather events, conflicts, and economic
instability. The report warns that persistent food
inflation, coupled with slow economic growth, could push
millions further into poverty.

Critical
minerals: A vital opportunity for accelerating sustainable
development
The report highlights the potential
of critical minerals for the energy transition—such as
lithium, cobalt, and rare earth elements—and also for
accelerating progress towards the SDGs in many
countries.

For resource-rich developing countries,
rising global demand for critical minerals presents a unique
opportunity to boost growth, create jobs, and increase
public revenues for investment in sustainable development.
However, the report warns that these opportunities come with
significant risks. Poor governance, unsafe labour practices,
environmental degradation, and over-reliance on volatile
commodity markets could exacerbate inequalities and harm
ecosystems, undermining long-term development
gains.

“Critical minerals have immense potential to
accelerate sustainable development, but only if managed
responsibly,” said Li Junhua, United Nations
Under-Secretary-General for Economic and Social Affairs.
“Governments must adopt forward-looking policies and
comprehensive regulatory frameworks to drive sustainable
extraction, equitable benefit-sharing, and investments in
building productive capacities to maximize the development
gains from these resources.”

Call for bold
multilateral action
The report calls for bold
multilateral action to address the interconnected crises of
debt, inequality, and climate change. Monetary easing alone
will not be sufficient to reinvigorate global growth or
bridge widening disparities. Governments must avoid overly
restrictive fiscal policies and instead focus on mobilizing
investments in clean energy, infrastructure, and critical
social sectors such as health and education.

Stronger
international cooperation is also essential to manage the
environmental, social, and economic risks associated with
critical minerals. Harmonized sustainability standards, fair
trade practices, and technology transfers are needed to
ensure that developing countries can harness these resources
responsibly and equitably. 
~
The report is
available on
and desapublications.un.org

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