EDITORIAL: The United Nations’ recent projection of a steady 2.8pc global economic growth for 2025, mirroring 2024’s rate, underscores a persistent sluggishness in the world’s economic recovery.
This stagnation is largely attributed to the tempered performances of the United States and China, the two largest economies, whose anticipated slower growth rates are expected to influence global economic dynamics significantly.
The World Economic Situation and Prospects report highlights that, despite ongoing expansion, the global economy is set to grow at a pace slower than the pre-pandemic average of 3.2pc observed from 2010 to 2019. This deceleration is linked to lingering structural challenges, including weak investment, sluggish productivity growth, high debt levels, and demographic pressures.
In the United States, growth is projected to decelerate from 2.8pc in the previous year to 1.9pc in 2025, influenced by a softening labour market and a slowdown in consumer spending. China’s growth is estimated at 4.9pc for 2024, with a slight decline to 4.8pc in 2025, as public sector investments and strong export performance are partially offset by subdued consumption growth and lingering weaknesses in the property sector.
Europe is expected to experience a modest recovery, with growth increasing from 0.9pc in 2024 to 1.3pc in 2025, supported by easing inflation and resilient labour markets.
Notably, South Asia is poised to remain the world’s fastest-growing region, with regional GDP projected to expand by 5.7pc in 2025 and 6pc in 2026. This robust performance is driven by strong economic activity in India and recoveries in Bhutan, Nepal, Pakistan, and Sri Lanka. India, as the largest economy in South Asia, is forecast to grow by 6.6pc in 2025 and 6.8pc in 2026, propelled by robust private consumption and investment.
The report also anticipates that major central banks will further reduce interest rates in 2025 as inflationary pressures ease, with global inflation projected to decline from 4pc in 2024 to 3.4pc in 2025.
This anticipated monetary easing is expected to offer some relief to households and businesses. However, the report cautions that monetary easing alone will not suffice to reinvigorate global growth or address widening disparities.
It calls for bold multilateral action to tackle interconnected crises, including debt, inequality, and climate change. The persistent structural challenges highlighted in the report necessitate comprehensive policy interventions.
Addressing weak investment requires creating conducive environments for both domestic and foreign investors, ensuring political stability, and implementing clear regulatory frameworks. Enhancing productivity growth involves investing in education, technology, and infrastructure to foster innovation and efficiency.
High debt levels, particularly in developing economies, call for prudent fiscal management and, in some cases, debt restructuring to ensure sustainable economic pathways. Demographic pressures, such as aging populations in certain regions, require policies that adapt to changing labor market dynamics and social security needs.
The projected steady yet subdued global economic growth for 2025 reflects a complex interplay of factors. While some regions like South Asia exhibit robust growth prospects, the overall global outlook remains tempered by significant structural challenges. Addressing these issues through coordinated multilateral efforts and comprehensive policy measures is essential to achieve sustainable and inclusive economic growth in the coming years.
Copyright Business Recorder, 2025
Comments